David A. Hensher

THE MIXED LOGIT MODEL: THE STATE OF PRACTICE

The mixed logit model is considered to be the most promising state of the art discrete choice model currently available. Increasingly researchers and practitioners are estimating mixed logit models of various degrees of sophistication with mixtures of revealed preference and stated choice data. It is timely to review progress in model estimation since the learning curve is steep and the unwary are likely to fall into a chasm if not careful. These chasms are very deep indeed given the complexity of the mixed logit model. Although the theory is relatively clear, estimation and data issues are far from clear. Indeed there is a great deal of potential mis-inference consequent on trying to extract increased behavioural realism from data that are often not able to comply with the demands of mixed logit models. Possibly for the first time we now have an estimation method that requires extremely high quality data if the analyst wishes to take advantage of the extended behavioural capabilities of such models. This paper focuses on the new opportunities offered by mixed logit models and some issues to be aware of to avoid misuse of such advanced discrete choice methods by the practitioner.

A latent class model for discrete choice analysis: contrasts with mixed logit

The multinomial logit model (MNL) has for many years provided the fundamental platform for the analysis of discrete choice. The basic models several shortcomings, most notably its inherent assumption of independence from irrelevant alternatives have motivated researchers to develop a variety of alternative formulations. The mixed logit model stands as one of the most significant of these extensions. This paper proposes a semi-parametric extension of the MNL, based on the latent class formulation, which resembles the mixed logit model but which relaxes its requirement that the analyst makes specific assumptions about the distributions of parameters across individuals. An application of the model to the choice of long distance travel by three road types (2-lane, 4-lane without a median and 4-lane with a median) by car in New Zealand is used to compare the MNL latent class model with mixed logit.

Stated preference analysis of travel choices: the state of practice

Stated preference (SP) methods are widely used in travel behaviour research and practice to identify behavioural responses to choice situations which are not revealed in the market, and where the attribute levels offered by existing choices are modified to such an extent that the reliability of revealed preference models as predictors of response is brought into question. This paper reviews recent developments in the application of SP models which add to their growing relevance in demand modelling and prediction. The main themes addressed include a comparative assessment of choice models and preference models, the importance of scaling when pooling different types of data, especially the appeal of SP data as an enriching strategy in the context of revealed preference models, hierarchical designs when the number of attributes make single experiments too complex for the respondent, and ways of accommodating dynamics (i.e. serial correlation and state dependence) in SP modelling.

Combining sources of preference data

Abstract This paper brings together several research streams and concepts that have been evolving in random utility choice theory: (1) it reviews the literature on stated preference (SP) elicitation methods and introduces the concept of testing data generation process invariance across SP and revealed preference (RP) choice data sources; (2) it describes the evolution of discrete choice models within the random utility family, where progressively more behavioural realism is being achieved by relaxing strong assumptions on the role of the variance structure (specifically, heteroscedasticity) of the unobserved effects, a topic central to the issue of combining multiple data sources; (3) particular choice model formulations incorporating heteroscedastic effects are presented, discussed and applied to data. The rich insights possible from modelling heteroscedasticity in choice processes are illustrated in the empirical application, highlighting its relevance to issues of data combination and taste heterogeneity.

Service quality––developing a service quality index in the provision of commercial bus contracts

The measurement of service quality continues to be a challenging research theme and one of great practical importance to service providers and regulatory agencies. The key challenges begin with the identification of the set of potentially important dimensions of service quality perceived by passengers, current and potential. We then have to establish a way of measuring each attribute and identifying their relative importance in the overall calculation of satisfaction associated with existing service levels. Once a set of relevant attributes has been identified, this information can be integrated into programs such as monitoring and benchmarking, and even in contract specification. This paper, building on earlier research by the authors, investigates ways of quantifying service quality and comparing the levels within and between bus operators. The importance of establishing suitable market segments and the need to scale the service quality index for each operator to make meaningful comparisons is highlighted.

A mixed generalized ordered response model for examining pedestrian and bicyclist injury severity level in traffic crashes.

This paper proposes an econometric structure for injury severity analysis at the level of individual accidents that recognizes the ordinal nature of the categories in which injury severity are recorded, while also allowing flexibility in capturing the effects of explanatory variables on each ordinal category and allowing heterogeneity in the effects of contributing factors due to the moderating influence of unobserved factors. The model developed here, referred to as the mixed generalized ordered response logit (MGORL) model, generalizes the standard ordered response models used in the extant literature for injury severity analysis. To our knowledge, this is the first such formulation to be proposed and applied in the econometric literature in general, and in the safety analysis literature in particular. The MGORL model is applied to examine non-motorist injury severity in accidents in the USA, using the 2004 General Estimates System (GES) database. The empirical findings emphasize the inconsistent results obtained from the standard ordered response model. An important policy result from our analysis is that the general pattern and relative magnitude of elasticity effects of injury severity determinants are similar for pedestrians and bicyclists. The analysis also suggests that the most important variables influencing non-motorist injury severity are the age of the individual (the elderly are more injury-prone), the speed limit on the roadway (higher speed limits lead to higher injury severity levels), location of crashes (those at signalized intersections are less severe than those elsewhere), and time-of-day (darker periods lead to higher injury severity).

The valuation of commuter travel time savings for car drivers: evaluating alternative model specifications

The empirical valuation of travel time savings is a derivative of the ratio of parameter estimates in a discrete choice model. The most common formulation (multinomial logit) imposes strong restrictions on the profile of the unobserved influences on choice as represented by the random component of a preference function. As we progress our ability to relax these restrictions we open up opportunities to benchmark the values derived from simple (albeit relatively restrictive) models. In this paper we contrast the values of travel time savings derived from multinomial logit and alternative specifications of mixed (or random parameter) logit models. The empirical setting is urban car commuting in six locations in New Zealand. The evidence suggests that less restrictive choice model specifications tend to produce higher estimates of values of time savings compared to the multinomial logit model; however the degree of under-estimation of multinomial logit remains quite variable, depending on the context.

Parking demand and responsiveness to supply, pricing and location in the Sydney central business district

This paper investigates the role of parking pricing and supply by time of day in whether to drive and park in the central business district (CBD). A stated preference survey of car drivers and public transport users was undertaken at a number of parking locations, public transit interchanges, and shopping centres in Sydney CBD during 1998. In the context of a current trip to the CBD, respondents were asked to consider six alternatives, including three parking locations in the CBD, park outside of the CBD with public transport connection to the CBD, switch to public transport, or forego that trip to the CBD. The three parking locations were defined by hours of operation, a tariff schedule, and access time to the final destination from the parking station. Data from the survey were then used to estimate a nested logit model of mode and parking choices, which was then used to simulate the impacts of supply pricing scenarios on CBD parking share. The change in CBD parking share attributable to supply by time of day is less than 3%, compared to 97% attributable to parking prices.

Using stated response choice data to enrich revealed preference discrete choice models

There is growing interest in exploring the view that both revealed preference (RP) and stated preference (SP) data have useful information and that their integration will enrich the overall explanatory power of RP choice models. These two types of data have been independently used in the estimation of a wide variety of discrete choice applications in marketing. In order to combine the two data sources, each with independent choice outcomes, allowance must be made for their different scaling properties. The approach uses a full information maximum likelihood estimation procedure of the hierarchical logit form to obtain suitable scaling parameters to make one or more data sets comparable. We illustrate the advantages of the dual data strategy by comparing the results with those obtained from models estimated independently with RP and SP data. Data collected as part of a study of high speed rail is used to estimate a set of illustrative mode choice models.

Using Discrete Choice Models with Experimental Design Data to Forecast Consumer Demand for a Unique Cultural Event

An approach is developed to forecast participation in unique events with long gestation periods. Experimental observations of choice are derived for conjoint measurement type multiattribute alternatives that describe possible event configurations. The choice data are analyzed by means of discrete choice econometric models. A multinomial logit choice model is applied to forecast the choice of attendance at various types of international expositions. The empirical work was part of the planning efforts undertaken to investigate the potential demand for an international exposition to be held in Eastern Australia in conjunction with the Australian 1988 bicentennial celebrations.