Trading off positive and negative service changes in childcare: a choice experiment using a latent class modelling approach

Theoretically, the choice of childcare mode should be influenced by the quality of the childcare attributes. However, such preference relations have been difficult to identify in past studies. One reason lies in the properties of the data collected, such as insufficient variation or strong correlation in the childcare qualities. To make a formal test of parent preferences for childcare qualities, we apply a choice experiment framework, construct a hypothetical market for childcare and ask 1,324 parents to act on the market. The results indicate that parents react positively and negatively to better and poorer childcare qualities, respectively. The results also indicate that the preferences are subject to substantial heterogeneity and that costs of losses in qualities are perceived as being far greater than the corresponding benefits of improvements.