Joint model of choice of residential neighborhood and bicycle ownership accounting for self-selection and unobserved heterogeneity

This paper presents a joint model of residential neighborhood type choice and bicycle ownership. The objective is to isolate the true causal effects of neighborhood attributes on household bicycle ownership from a spurious association because of residential self-selection effects. The joint model accounts for residential self-selection because of both observed sododemographic characteristics and unobserved preferences. In addition, the model allows differential residential self-selection effects across different sociodemographic segments. The model was estimated by using a sample of more than 5,000 households from the San Francisco, California, Bay Area. Furthermore, a policy simulation analysis was carried out to estimate the impacts of neighborhood characteristics and sociodemographics on bicycle ownership. The model results show a substantial presence of residential self-selection effects because of observed sociodemographics, such as the number of children, dwelling type, and house ownership. It is shown for the first time in the self-selection literature that ignoring such observed self-selection effects may not always lead to overestimation of the impact of neighborhood attributes on travel-related choices, such as bicycle ownership. In the current context, ignoring self-selection because of sociodemographic attributes resulted in an underestimation of the impact of neighborhood attributes on bicycle ownership. In the context of unobserved factors, no significant self-selection effects were found. However, it is recommended that such effects as well as the heterogeneity in such effects be tested for before it is concluded that there are no unobserved factors contributing to residential self-selection.