Accommodating multiple constraints in the multiple discrete-continuous extreme value (MDCEV) choice model

Marisol Castro, Chandra R. Bhat, Ram Pendyala, Sergio R. Jara-Díaz

Research output: Contribution to journalArticle

34 Citations (Scopus)

Abstract

Multiple-discrete continuous choice models formulated and applied in recent years consider a single linear resource constraint, which, when combined with consumer preferences, determines the optimal consumption point. However, in reality, consumers face multiple resource constraints such as those associated with time, money, and capacity. Ignoring such multiple constraints and instead using a single constraint can, and in general will, lead to poor data fit and inconsistent preference estimation, which can then have a serious negative downstream effect on forecasting and welfare/policy analysis.In this paper, we extend the multiple-discrete continuous extreme value (MDCEV) model to accommodate multiple constraints. The formulation uses a flexible and general utility function form, and is applicable to the case of complete demand systems as well as incomplete demand systems. The proposed MC-MDCEV model is applied to time-use decisions, where individuals are assumed to maximize their utility from time-use in one or more activities subject to monetary and time availability constraints. The sample for the empirical exercise is generated by combining time-use information from the 2008 American Time Use Survey and expenditure records from the 2008 US Consumer Expenditure Survey. The estimation results show that preferences can get severely mis-estimated, and the data fit can degrade substantially, when only a subset of active resource constraints is used.

Original languageEnglish (US)
Pages (from-to)729-743
Number of pages15
JournalTransportation Research Part B: Methodological
Volume46
Issue number6
DOIs
StatePublished - Jul 2012

Fingerprint

Information use
Availability
expenditures
resources
demand
Extreme values
Choice models
social policy
time
money
Resource constraints
Welfare policy
Demand systems
Exercise
Optimal consumption
Incomplete demand system
Availability constraints
Consumer preferences
Utility function
Expenditure

Keywords

  • Consumer theory
  • Multiple constraints
  • Multiple discrete-continuous extreme value model
  • Time use
  • Travel demand

ASJC Scopus subject areas

  • Management Science and Operations Research
  • Transportation

Cite this

Accommodating multiple constraints in the multiple discrete-continuous extreme value (MDCEV) choice model. / Castro, Marisol; Bhat, Chandra R.; Pendyala, Ram; Jara-Díaz, Sergio R.

In: Transportation Research Part B: Methodological, Vol. 46, No. 6, 07.2012, p. 729-743.

Research output: Contribution to journalArticle

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