Stochastic frontier estimation of budgets for Kuhn-Tucker demand systems

Application to activity time-use analysis

Abdul Rawoof Pinjari, Bertho Augustin, Vijayaraghavan Sivaraman, Ahmadreza Faghih Imani, Naveen Eluru, Ram Pendyala

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

We propose a stochastic frontier approach to estimate budgets for the multiple discrete-continuous extreme value (MDCEV) model. The approach is useful when the underlying time and/or money budgets driving a choice situation are unobserved, but the expenditures on the choice alternatives of interest are observed. Several MDCEV applications hitherto used the observed total expenditure on the choice alternatives as the budget to model expenditure allocation among choice alternatives. This does not allow for increases or decreases in the total expenditure due to changes in choice alternative-specific attributes, but only allows a reallocation of the observed total expenditure among different alternatives. The stochastic frontier approach helps address this issue by invoking the notion that consumers operate under latent budgets that can be conceived (and modeled) as the maximum possible expenditure they are willing to incur. The proposed method is applied to analyze the daily out-of-home activity participation and time-use patterns in a survey sample of non-working adults in Florida. First, a stochastic frontier regression is performed on the observed out-of-home activity time expenditure (OH-ATE) to estimate the unobserved out-of-home activity time frontier (OH-ATF). The estimated frontier is interpreted as a subjective limit or maximum possible time individuals can allocate to out-of-home activities and used as the time budget governing out-of-home time-use choices in an MDCEV model. The efficacy of this approach is compared with other approaches for estimating time budgets for the MDCEV model, including: (a) a log-linear regression on the total observed expenditure for out-of-home activities and (b) arbitrarily assumed, constant time budgets for all individuals in the sample. A comparison of predictive accuracy in time-use patterns suggests that the stochastic frontier and log-linear regression approaches perform better than arbitrary assumptions on time budgets. Between the stochastic frontier and log-linear regression approaches, the former results in slightly better predictions of activity participation rates while the latter results in slightly better predictions of activity durations. A comparison of policy simulations demonstrates that the stochastic frontier approach allows for the total out-of-home activity time expenditure to either expand or shrink due to changes in alternative-specific attributes. The log-linear regression approach allows for changes in total time expenditure due to changes in decision-maker attributes, but not due to changes in alternative-specific attributes.

Original languageEnglish (US)
Pages (from-to)117-133
Number of pages17
JournalTransportation Research Part A: Policy and Practice
Volume88
DOIs
StatePublished - Jun 1 2016
Externally publishedYes

Fingerprint

Linear regression
budget
expenditures
time budget
time expenditure
demand
regression
participation
time
Demand systems
Expenditure
Stochastic frontier estimation
decision maker
money
simulation
Extreme values

Keywords

  • Latent budgets
  • Multiple discrete-continuous model
  • Stochastic frontier model
  • Time budgets
  • Time use analysis

ASJC Scopus subject areas

  • Civil and Structural Engineering
  • Transportation
  • Management Science and Operations Research

Cite this

Stochastic frontier estimation of budgets for Kuhn-Tucker demand systems : Application to activity time-use analysis. / Pinjari, Abdul Rawoof; Augustin, Bertho; Sivaraman, Vijayaraghavan; Faghih Imani, Ahmadreza; Eluru, Naveen; Pendyala, Ram.

In: Transportation Research Part A: Policy and Practice, Vol. 88, 01.06.2016, p. 117-133.

Research output: Contribution to journalArticle

Pinjari, Abdul Rawoof ; Augustin, Bertho ; Sivaraman, Vijayaraghavan ; Faghih Imani, Ahmadreza ; Eluru, Naveen ; Pendyala, Ram. / Stochastic frontier estimation of budgets for Kuhn-Tucker demand systems : Application to activity time-use analysis. In: Transportation Research Part A: Policy and Practice. 2016 ; Vol. 88. pp. 117-133.
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