Practical Method to Simulate Multiple Discrete-Continuous Generalized Extreme Value Model: Application to Examine Substitution Patterns of Household Transportation Expenditures

Jie Ma, Xin Ye, Abdul Rawoof Pinjari

Research output: Contribution to journalArticle

Abstract

The multiple discrete-continuous generalized extreme value (MDCGEV) model has been derived from multivariate extreme value (MEV)-based stochastic specifications to relax the independence assumption in the multiple discrete-continuous extreme value (MDCEV) model. It is analogous to the situation where a generalized extreme value (GEV) model relaxes the same assumption in a multinomial logit (MNL) model. However, unlike the case of single discrete choice model where substitution patterns can be understood based on elasticity expressions for a change in the value of an explanatory variable, the MDCEV and its variants do not offer closed-form elasticity expressions. The predictions must be compared explicitly under the base case and policy case scenarios. To perform a prediction exercise with MDCEV or its variants, random samples have to be drawn from the relevant stochastic distributions, which is actually not a straightforward task. In this paper, a practical method is proposed for drawing from an MEV distribution and the method is demonstrated to examine substitution patterns in an MDCGEV model for household transportation expenditures. The empirical results show that the cross-elasticities of explanatory variables in the MDCGEV model exhibit more variations than those in MDCEV and multiple discrete-continuous nested extreme value (MDCNEV) models.

Original languageEnglish (US)
JournalTransportation Research Record
DOIs
StateAccepted/In press - Jan 1 2019
Externally publishedYes

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Substitution reactions
Elasticity
Specifications

ASJC Scopus subject areas

  • Civil and Structural Engineering
  • Mechanical Engineering

Cite this

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title = "Practical Method to Simulate Multiple Discrete-Continuous Generalized Extreme Value Model: Application to Examine Substitution Patterns of Household Transportation Expenditures",
abstract = "The multiple discrete-continuous generalized extreme value (MDCGEV) model has been derived from multivariate extreme value (MEV)-based stochastic specifications to relax the independence assumption in the multiple discrete-continuous extreme value (MDCEV) model. It is analogous to the situation where a generalized extreme value (GEV) model relaxes the same assumption in a multinomial logit (MNL) model. However, unlike the case of single discrete choice model where substitution patterns can be understood based on elasticity expressions for a change in the value of an explanatory variable, the MDCEV and its variants do not offer closed-form elasticity expressions. The predictions must be compared explicitly under the base case and policy case scenarios. To perform a prediction exercise with MDCEV or its variants, random samples have to be drawn from the relevant stochastic distributions, which is actually not a straightforward task. In this paper, a practical method is proposed for drawing from an MEV distribution and the method is demonstrated to examine substitution patterns in an MDCGEV model for household transportation expenditures. The empirical results show that the cross-elasticities of explanatory variables in the MDCGEV model exhibit more variations than those in MDCEV and multiple discrete-continuous nested extreme value (MDCNEV) models.",
author = "Jie Ma and Xin Ye and Pinjari, {Abdul Rawoof}",
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