Combining discrete and continuous mixing approaches to accommodate heterogeneity in price sensitivities in environmental choice analysis

Data from a discrete choice experiment aimed at eliciting the demand for recreationalwalking trails on farmland in the Republic of Ireland is used to explore the consequences of misspecifying the cost coefficient. To enable straightforwardcalculation of WTP from the distributions of the non-price coefficients, the pricecoefficient is typically held constant in mixed logit models. This implies that allrespondents are equally price sensitive. In this paper we test the validity of thisassumption. Our approach is based on a comparison and combination of discreteand continuous mixing approaches (i.e., a mixture of distributions) to uncoverthe unobserved heterogeneity in price sensitivities. Results from the analysishighlight that model fit and willingness to pay are sensitive to the distributionalassumptions used to represent the price coefficient.