Abstract
It is common practice in choice modelling to include the socioeconomic characteristics of other members of a household in the utility expressions associated with the preferences of a particular individual. By including household descriptors, the analyst is assuming that other household members can influence the choices made by the household as if the preference weights (or marginal utilities) are reflective of equal influence of all members of a household. In reality it is likely that there is a power relationship that underlies the contribution of the individual whose preferences are being studied and the contribution of other household members, typically proxied by a number of socioeconomic descriptors. In this paper we condition the individual and the household explanatory variables on an additional parameter that represents the influence or power that each agent has in the revelation of the preferences of a sampled individual. Using a data set of the stated choice of automobile fuel type (petrol, diesel, hybrid), we estimate a nonlinear model to identify the strength of the power relationship, and find that the power contribution of the household members to the individuals choice vary across alternatives. The model with the power relationship is found to be a statistical improvement and delivers substantially different elasticities than the traditional model with household characteristics.
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Notes
The method developed in this paper can be implemented with revealed preference data (if it is available), although we do not see such data as being suitable for the application in this paper where one alternative, the hybrid fuel source, is essentially a new alternative (at the time of the survey it was less than one percent of the market share), and where the main attributes of interest are not currently in place in the market.
The choice experiment was deliberately designed such that it could capture behaviour in a future where alternative vehicle technology was competitive with existing vehicle attributes. As such there was no restriction placed on range or refuelling options of the hybrid alternative. Additionally the hybrid alternative was only specified as being a vehicle type that was a fuel source that was alternative to the current dominant market options. While other studies typically specify the hybrid as being some variant electric “hampered” by current limitations on range and price competitiveness, this survey was deliberately designed to be free of those restrictions.
In terms of alternative acceptability, in 14 % of choice tasks all alternatives were acceptable, in 46 % one alternative was unacceptable, in 29 % two alternatives were unacceptable and in eleven percent of choice tasks all three alternatives were unacceptable to respondents. The petrol alternative was unacceptable in 42 % of choice tasks, the diesel alternative in 51 % and the hybrid in 44 %. With respect to certainty, respondents were reasonably certain about the choices they made, with an average of 7.20 (with a standard deviation of 2.22) on a scale from Very Unsure (1) to Very Sure (10).
A referee suggested we use a hold out sample on a subset of the design. This is something worth considering in future research with a larger sample, but the overall sample size of our dataset is too small to be removing a sufficiently large sample to test the referees request. Removing part of the optimal design to test on the same people, is not strictly a hold out sample.
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Acknowledgment
The research contribution is linked to an Australian Research Council grant DP140100909 (2014–2016) on ‘Integrating Attribute Decision Heuristics into Travel Choice Models that accommodate Risk Attitude and Perceptual Conditioning’. The comments of two referees have and Elisabetta Cherchi have materially improved this paper.
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Hensher, D.A., Ho, C. & Beck, M.J. A simplified and practical alternative way to recognise the role of household characteristics in determining an individual’s preferences: the case of automobile choice. Transportation 44, 225–240 (2017). https://doi.org/10.1007/s11116-015-9635-9
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DOI: https://doi.org/10.1007/s11116-015-9635-9