Designing the choice experiments

The experimental design for the choice experiments is based on an “efficient” design, whereby the choice alternatives that are presented to respondents are chosen on the basis of estimating reliable model coefficients, assuming a multinomial logit model structure (see Box 3.1 for details).

Because the choices incorporate a substantial amount of information, each respondent is presented with six choice scenarios in each choice experiment.

The design for experiments 1 and 2 incorporates 60 possible choice pairs, which have been grouped into ten blocks of six choices each; 60 choice pairs are favoured over the minimum requirement of 30 in order to provide increased variability in the attribute levels presented. For experiment 3 there are 48 possible choice pairs, which have been grouped into eight blocks of six choices each. Here 48 choice pairs were favoured over the minimum require of 12 for the reason described above. The grouping has been undertaken to minimise correlation with attributes to ensure there is a reasonable range of attribute levels tested within any specific block.

The design matrices for Experiment 1 and Experiment 2 are identical but the respondent is presented with different blocks for each experiment.

The prices for each choice are based around current stamp and parcel prices in each country. Table 3.6 shows current letter prices for Sweden, Poland and Italy (based on a letter weighing 20 g).

Box 3.1: An efficient design

In ‘efficient’ designs the choices that are generated and presented to respondents are chosen on the basis of estimating reliable model coefficients, in this case assuming a multinomial logit model structure. The efficient design, in contrast to more traditional

‘orthogonal’ design, not only merely tries to minimise the correlation in the data for estimation purposes, but aims to provide data that will generate parameter estimates with as small as possible standard errors.

The most widely used measure, called the D-error, which takes the determinant of the asymptotic variance–covariance (AVC) matrix, is used in our design process. A design with the lowest D-error is called D-optimal. In practice, it is very difficult to find the design with the lowest D-error, therefore we are satisfied if the design has a sufficiently low D-error, called D-efficient design. If the successive iteration of efficient designs does not reduce the value of D-error significantly, or D-error stays the same and its value is very low, then it would be a good point to stop the iteration and use the design matrix generated. The experimental designs have been produced using the NGENE software package (Choice Metrics, 2010).

RAND Europe Implementing the valuation methodology

Accent in three member states

Swiss Economics

Table 3.6: Current letter prices

Letters (20 g)

J+1 J+3

Sweden 6.00 SEK 5.50 SEK

Poland (up to 50 g) 1.95 PLN 1.55 PLN

Italy* 0.60 euro

* Only a single letter service exists in Italy.

Source: Sweden Post, Poczta Polska and Poste Italiane.

For single class service options, price adjustments are made to the J+3 service prices (or the single price for Italy). For the two-class service options, the economy (J+3) prices are adjusted by a factor of 0.75 before the price adjustments are applied to ensure that the range of two-class prices is both cheaper and more expensive than the one-class price options. This price is then multiplied by a random factor (1.1, 1.2, 1.3, 1.4 or 1.5), specified within the experimental design, to produce a priority (J+1) stamp price.

Current parcel prices (for 1 kg parcels) are shown in Table 3.7. The same methodology as described for letters, but using parcel prices (based on a 1 kg parcel), is used for presenting parcel costs in Experiment 2.

Table 3.7: Current parcel prices (Sweden Post, Poczta Polska and Poste Italiane)

Parcels – 1 kg

J+1 J+3

Sweden 48 SEK 46 SEK

Poland (up to 50 g) 11 PLN 9.5 PLN

Italy* 12 euro 11.40 euro

Figures 3.4–3.6 present examples of the introductory text and format of the different choice exercises that were undertaken in the final surveys.

Introduction:

Choice 1

Number of classes and speed of service

Delivery location Guaranteed time of delivery Percentage of mail delivered on time Percentage of letters lost

Stamp price

Choice (mark "X" in preferred option)

We would now like you to consider different hypothetical postal service options and indicate which you would most prefer when thinking about sending and receiving letters.

Each of the options is described by different postal service attributes, such as:

- Speed of delivery, which describes how many classes of postal service there would be and how quickly letters are required to be delivered - Delivery location: describing where letters would be delivered to – for example, they could be delivered to your #HOME# or #BUSINESS# or to save on money they could be delivered to secure locked mail boxes near your #HOME# or #BUSINESS#

- the time that the mail is delivered to your #HOME# / #BUSINESS#

- the percentage of mail delivered on time - the percentage of mail which is lost - Stamp prices

We will present you with 6 hypothetical choice scenarios. We would like you to carefully consider each of the choices and choose the option you most prefer for your own postal needs. Please note that we will be talking to a lot of people, including elderly and disabled people to obtain their views, so please consider your own postal needs only when thinking about the different options.

Finally, we would like to emphasise that there are no right or wrong answers, so please consider the information for each option carefully and select the option that you most prefer.

Alternative A Alternative B

Which postal service would you prefer for letters?

90 out of 100 letters delivered on time 80 out of 100 letters delivered on time Delivered to secure mail box 100m from

home/business

Delivered to home/business during work hours only

Price:

1 out of 100 letters lost

Next day:

3-day:

No lost letters

Delivered by 9:00 Delivered by 13:00

One class: delivery by next working day

Two classes: next working day and within 3 working days

Figure 3.4: Introduction and example choice scenario for Experiment 1

RAND Europe Implementing the valuation methodology

Accent in three member states

Swiss Economics

Introduction:

Choice 1

Number of classes and speed of service

Delivery location

Guaranteed time of delivery Percentage of mail delivered on time Percentage of parcels lost

Price for 1kg parcel

Choice (mark "X" in preferred option)

Price: Next day:

3-day:

One class: delivery by next working day

Two classes: next working day and within 3 working days

1 out of 100 parcels lost No lost letters

We would now like you to consider different hypothetical postal service options and indicate which you would most prefer when considering sending and receiving parcels. Specifically we are considering the case where you send or receive a 1 kg parcel, which is about the weight of a pair of shoes.

Again, we will present you with 6 hypothetical choice scenarios, each described by the same attributes as in the previous exercise, but this time we would like you to think about your needs for sending and receiving parcels. Again please consider each choice carefully and choose the option you most prefer for your own postal needs.

Delivered by 9:00 Delivered by 13:00

90 out of 100 parcels delivered on time 80 out of 100 parcels delivered on time Delivered to secure mail box 100m from

home/business where you can collect your parcels at any time

Delivered to home/business during work hours only

Which postal service would you prefer for a 1kg parcel?

Alternative A Alternative B

Figure 3.5: Introduction and example choice scenario for Experiment 2

Introduction:

Choice (mark "X" in preferred option)

1km from home 3km from home

Average stamp price:

Average stamp price:

Delivery to all addresses in the country

Delivery to 99% (99 of 100) addresses in the country

Same price to deliver to any destination within Poland / Italy / Sweden

Difference prices to deliver to different destinations within Poland / Italy / Sweden. For

example, it might be cheaper for local deliveries and more expensive for more distant

destinations.

Open 2 hours per day

Basic postal services available

Open 8 hours per day

Full range of postal services and additional financial services such as banking available In this last exercise, we will again present you with different hypothetical postal service options and would like you to indicate the one you most prefer.

In this exercise the different service options will be described by attributes such as:

- Where you are able to access postal services, including the distance you would have to travel, the hours of opening and the types of services available

- How much of the country receives postal deliveries (for those locations where there are no postal delivery services residents would have to to collect their post for nearby postal service outlets)

- Whether the price of a letter or package is the same for all locations or whether the price could be different depending on where you are sending it to

- Stamp prices

Again we will present you with 6 hypothetical choice scenarios and we would like you to consider these carefully. As before, please consider your own needs only.

Which postal service would you prefer?

Alternative A Alternative B

Figure 3.6: Introduction and example choice scenario for Experiment 3