Income, Time Effects and Direct Preferences in a Multimodal Choice Context: Application of Mixed RP/SP Models with Non-Linear Utilities |
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Authors: | Elisabetta Cherchi Juan de Dios Ortúzar |
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Affiliation: | (1) CRiMM-Dipartimento di Ingegneria del Territorio, Facoltà di Ingegneria-Università di Cagliari, Piazza d'Armi, 16-09123 Cagliari, Italy;(2) Departamento de Ingeniería de Transporte, Pontificia Universidad Católica de Chile, Casilla 306, Cod. 105 Santiago 22, Chile |
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Abstract: | Transport problems typically involve at least two types of constraints, on income and on time. Therefore, the indirect utility
function depends either on the income available after having subtracted the cost of the discrete alternative and on the free
time left after having worked and travelled by each competing option. In the typical linear-in-the-attributes and in-the-parameters
specification, that represents the first grade approximation of the indirect utility function, the effect of income and time
constraints cancel out and only the cost and time of the alternatives matter in the comparison between them. From a microeconomic
point of view this is equivalent to assume that income and time effects could be disregarded; which is not always the case.
To account for these effects the utility function should include second order attributes; however, in non-linear utility functions
it may not be easy to distinguish among several effects that could be relevant: direct preferences for good and leisure, and
simple interactions between attributes other than income and time effects. This paper analyses these effects from a theoretical
point of view focusing on the possible confounding problem in detecting income and time effects. We use a dataset collected
for a modal choice context and containing both revealed and stated preference data, and estimate several NL models examining
the effect of the different second-order terms on detecting income and time effects. We compared specifications including
square cost and time attributes, interactions between time and cost, cost divided by the income available to be spent on free
time, and time multiplied by free time. Our results confirm the strong effect of direct preferences for goods and leisure
time on choice, and the potential confounding effect between quadratic attributes and other non-linear omitted terms. Finally,
we also found that care should be taken in highlighting income and time effects using mixed data sources, since confounding
effects can occur when non-linearities are accounted for in both data sets. |
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Keywords: | Income and time effects RP/SP data Non-linearities |
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