Welcome

Welcome to my web page. I am an assistant professor in economics at the University of Las Palmas de Gran Canaria. My main research areas are Human Decision Modeling, Non-Market Valuation and Bayesian Econometrics. Along these pages you can find more information about my research and teaching activities.

Selected Publications:

• Araña, J.E: and León, C.J. (2005). “Flexible Mixture Distribution Modelling of Dichotomous Choice Contingent Valuation with Heterogeneity”. Journal of Environmental Economics and Management, 50, 170-188.
• Araña, J.E: and León, C.J. and Hanmenan, W.M. (2008). “Emotions and Decision Rules in Discrete Choice Experiments for Valuing Health Care Programmes for the Elderly“. Journal of Health Economics, 36,(4), pp. 475-497.
• Araña, J.E: and León, C.J. (2008). “Do Emotions Matter? Stability of Preferences under Anchoring and Emotional Intensity Effects”. Ecological Economics, 66,(4), pp. 700-711.
• Araña, J.E: and León, C.J. (2008). “Terrorism and Tourism Demand: A Stated Preference Approach”. Annals of Tourism Research, 35, 2, 299-315.
• Araña, J.E: and León, C.J. (2002).“Willingness to Pay for Health Risk Reduction in the Context of Altruism”. Health Economics, 11(7): 623-35

Click here for a full list of publications

Click here for a short bio

What are the determinants of Tourist Satisfaction?

Trying to understand why people travel to places, and what is it that makes them happy about their trip are two of the most relevant questions that any single tourism professional have asked to himself at least once. If one reads the tourism academic literature, there is an extensive amount of papers aimed at developing theoretical explanations to these fundamental questions. Some answers come from the world of psychology and human being needs, others from the world of sociology, anthropology, economics and marketing among many other disciplines.

From the empirical point of view, another growing line of research is focused on exploring alternative answers by learning from experimental data. More concisely, these studies are based on collecting a large amount of data from specific market segments and specific destinations (either from surveys or from revealed behavior) and then test statistically which aspects significantly affect to their overall satisfaction and therefore where to travel and why.

Some researchers from the Xlab of the Institute of Tourism and Sustainable Development (TyDES) have reviewed the literature and found that most of the empirical research deal with this empirical question by running statistical regressions analysis that trying to explain tourist choices and levels of reported satisfaction by using alternative theories and an unbounded list of covariates (weather, accommodation quality, service quality, cost,…). This reduces the question to a mere statistical exercise.

In a recent paper published in the last issue of Tourism Management, professors Arturo Melian, Sergio Moreno and Jorge E. Araña proof that following this procedure may result in dramatically misleading management recommendations. In fact, their results support the common empirical wisdom that if one mines the data long enough one is bound to find something, however, one should not put too much trust in the finding. In other words, if one starts running regressions combining various covariates, attribute x1 (weather) will soon be found to be significant when the regression includes attribute x2 (accommodation) and x3 (price), but it becomes non-significant when X4 (residents hospitality) is included. The authors proposed an alternative called Bayesian model averaging (BMA) to address this issue.  By using simulations and real data from a survey of gay tourists to Gran Canaria (Canary Islands, Spain), they proof that results are more accurate and clearly more informative to the determinants of tourist satisfaction and destination choice.

A link to the paper can be found here doi:10.1016/j.tourman.2010.08.015

Melian, A., Moreno, S., Araña, J.E. (2011). Gay Tourism in a Sun and Beach Destination. Tourism Management, forthcoming

What is the impact of Corporate Social Responsibility (CSR) actions on Consumer Choices?

Consumers in modern societies are increasingly sensitive to environmental performance by large and small corporations, making it a crucial issue in the overall policy of corporate social responsibility (CSR). In a recent paper published in Environmental and Resource Economics, Xlab members, Carmelo J. León and Jorge E. Araña study the role of environmental performance in the profile of corporate social responsibility as perceived by consumers. Authors employed a stated preference approach to the study of consumer’s preferences. This approach allows for the evaluation in monetary terms of the trade-offs that individuals can make between various aspects of corporate policy decisions, including the extent of environmental performance.

Corporations in modern societies increasingly get involved in policies and activities which go beyond their main business objectives of making profits and satisfying consumers with competitive product characteristics. This tendency to increase the boundaries of the corporation can be seen as a manifestation of a social change in which companies are asked by their customers and stakeholders for a compromise with society and the interests of the community and the world they live. The extent to which this social change has consequential implications for consumers’ choices of market products is a matter of empirical quest. In a recent paper published in the journal Environmental and Resource Economics, Xlab members Carmelo J. León and Jorge E. Araña study this matter.

Xlab members have utilized a stated preference approach to the study of consumer reactions to a set of corporate social responsibility (CSR) policies. This approach allow them to evaluate the relative benefits that CSR policies could produce in consumers by posing them with various choices between alternative company strategies for specific products. This methodology also allows to derive how much extra money would consumers be willing to pay for the particular CSR policies as well as those policies which are more favourable by consumers for each product type. These are important questions from the perspective of the operative management of CSR, since company managers often doubt of the private returns that these measures could generate in a short and medium terms prospect.

The data collection process has been based on a general population survey focusing on three large consumer products: a pair of athletic shoes, a detergent and a pharmaceutical product. Previous research in this area (e.g. Auger et al. 2003) has found that consumers are quite reluctant to give up product characteristics for ethical concerns. Thus, in order to simplify the evaluation task and based on results with focus groups and in depth interviews, authors have focused only on the potential trade-offs and purchase decisions concerned with the CSR attributes, by abstracting from the influence of specific product characteristics. That is, authors have considered choice situations in which the competitive level of the products the firm offers are the same across corporations, but they differ only on the undertaking of CSR measures.

Discrete choice experiments are commonly based on the assumption that the consumer chooses based on random utility maximization. Since the departure from this assumption could have implications for CSR consumer preferences, the data has been modelled utilizing a mixture heuristics approach. This model allows to investigate potential departures from the random utility maximization assumption of discrete choice experiments. The results show that those subjects who depart from the linear compensatory heuristic by following the conjunctive rule tend to place a larger value on the firm’s performance with respect to labour conditions rather than on the management of environmental issues. This result supports the notion that the CR heuristics tend to give more prevalence to more emotional attributes than the linear compensatory rule.

In addition, there are some important effects across product types in the contributions that CSR policies make to individuals utility or satisfaction. These product effects are reflected in the additional amount that consumers would be willing to pay above the market price for the profiles including specific measures of CSR. The most salient attribute under the assumption of linear compensatory heuristics is the management of environmental quality while the less important attribute is the involvement in cultural and social activities. However, the pharmaceutical product performs better in terms of this latter attribute than the other two products. The product of the athletic shoes is the one, among those considered in this study, for which the CSR policies lead to higher satisfaction of the consumer and higher willingness to pay above the market price.

A link of the full paper can be found here

http://www.springerlink.com/content/p1041163505426m8/

Araña J.E. and León, C. J. (2009). “The Role of Environmental Management in Consumers Preferences for Corporate Social Responsibility” (con Jorge E. Araña), Environmental and Resource Economics, 44, pp. 495-506.

Emotional Economics. Do economic tools work when individuals choices are mainly based on emotions?

 

A relevant issue in Economics is to provide a reliable answer to the question of how individuals do make choices. The traditional model is based on the assumption that individuals have stable and well defined preferences, and their choices are driven by consistent optimization (Sen, 1982). The idea is that if agents are motivated enough (normally through monetary incentives) they are going to do the best for themselves, that is, maximize their utility function. The failure of this motivational requisite (or incentive compatibility) is the most widespread explanation for the observed deviations between real and predicted behavior with the traditional economic model.

This general framework constitutes a simple, intuitive and powerful way to explain a wide range of economic behavior. However, “while this model of individual behavior dominates contemporary economic analysis there is a long history among economists of questioning its behavioral validity and seeking alternatives” (McFadden, 1999). Some of the most relevant “anomalies” have been found in terms of its deviations from the transitivity assumption (Allais, 1953), monotonicity (Kahneman, Slovic and Tversky, 1982) and procedural invariance (Tversky and Kahneman, 1986; and Arrow, 1982).

In a recent paper published in Ecological Economics, Xlab members Carmelo León and Jorge Araña consider the role of human emotions in the procedural invariance observed in what has been termed “the anchoring effect”. Their empirical evidence focuses on the relationships between emotions and anchoring effects in the context of the valuation of non-market goods utilizing the double bounded dichotomous choice (DBDC) contingent valuation method. The main tested hypotheses are the following: i) the role of human emotional intensity on welfare estimates; ii) the independence of the cognitive (i.e. anchoring) and the emotional dimensions; and iii) the sensitivity to scope when both the emotional and the cognitive dimensions are present.

Xlab authors concluded that anchoring effects do not seem to have a relevant influence on the individual’s ability to discern among different dimensions of a non-market good in a valuation scenario. A useful implication might be that relative Willingness to pay (WTP) for public goods could be successfully elicited. Nevertheless, anchoring effects are still present in their application and raise serious concerns about the underlying nature of human values and the capability of preference elicitation techniques to capture them. If individual choices are influenced by external anchors, it can be questioned how can preferences be defined and how can elicitation techniques be able to seize them. As pointed out by Ariely et al. (2003), “even if there are no clear violations of the transitivity axiom, the researcher can not ascertain whether elicited choices reveal a set of unique and well-defined preferences”.

In order to shed light on the conditions under which bid anchors could have an influence on the formation of individual preferences, we looked at the potential role of individual’s emotions. In particular, we focused on the relationship between the EIS and the degree of anchor raised by the bid offered in the first binary question. The results show that anchoring effects decline as emotional intensity increases, reaching a minimum for an average value of EIS. After this point, anchoring effects are again significant. The major implication of these findings is that individuals tend to improve their ability for the non-market valuation task when their emotional intensity is moderate.

On the other hand, the omission of EIS in the valuation function could bias non-market valuation results. The correlation between cognitive and emotional intensity implies that some index of the latter needs to be considered in the systematic part of the utility or expenditure functions. To our knowledge, previous work has generally assumed independence between the cognitive and emotional dimensions. The common incorporation of unexplained emotional conditions as part of the stochastic term introduces correlation between the systematic and the stochastic parts, leading to biased results.

Our results concur with the notion that there might be a trade-off between the emotional and cognitive dimensions in non-market valuation tasks. That is, some degree of emotional intensity might help reduce the cognitive load and enhance performance in human decision making. Nevertheless, it should be acknowledged that this relationship is complex because of the multivariate factors that can influence individual’s emotions and the cognitive aspects involved in the survey instrument. Further research should explore the relationships of other emotional and cognitive factors that might play a role in the decision making task and the formation of individual’s preferences.

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Araña, J.E. and León, C.J. (2008). “Do Emotions Matter? Stability of Preferences under Anchoring and Emotional Intensity Effects”, Ecological Economics, 66 (4), pp. 700-711.

Nuevo Curso: Impacto del Turismo sobre los Destinos

Durante el mes de Noviembre se impartirá el Curso del M´ster Internacional de Turismo sobre Impacto del Turismo sobre los Destinos. Ya se encuentra disponible la web con toda la información, material, alumnos, etc….

IMPACTOS DEL TURISMO SOBRE LOS DESTINOS

Como siempre, cualquier comentario, sugerencia, aclaración es más que bienvenida (jarana@daea.ulpgc.es)

Gran Canaria Research Prize

We have been awarded the “Premio Gran Canaria de Investigación” (Research Prize) from the Real Sociedad Económica de amigos del País.¡ for our work on Tourist Planing and Sustainability. Congratulations to all collaborators and members of the UNESCO chair on Tourism and Sustainable Development.

WEB INFORMATION