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Confidence Interval for Willingness to Pay Measures in Mode Choice Models

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  • Raquel Espino

    ()

  • Juan Ortúzar

    ()

  • Concepción Román

    ()

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    Abstract

    We obtain confidence intervals for willingness-to-pay (WTP) measures derived from a mode choice model estimated to analyse travel demand for suburban trips in the two main interurban corridors in Gran Canaria using a mixed RP/SP data base. We considered a specification of the systematic utility that incorporates income effect, and interactions among socioeconomic variables and level-of-service attributes, as well as between travel cost and frequency. As our model provides rather complex expressions of the marginal utilities, we simulated the distribution of the WTP (in general, unknown) from a multivariate Normal distribution of the parameter vector. For every random draw of the parameter vector, the corresponding simulation of the WTP was obtained applying the sample enumeration method to the individuals in the RP database. The extremes of the confidence interval were determined by the percentiles on this distribution. After trying different simulation strategies we observed that the size of the intervals was strongly affected by the outliers as well as by the magnitude of the simulated parameters. In all cases examined the simulated distribution of the corresponding WTP measure presents an asymmetric shape that was very similar for the two model specifications considered. This is consistent with previous findings using a radically different approach. We also observed that the upper extreme of the confidence interval for the value of time in private transport was very unstable for different numbers of random draws. Copyright Springer Science + Business Media, LLC 2006

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    File URL: http://hdl.handle.net/10.1007/s11067-006-7694-3
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    Bibliographic Info

    Article provided by Springer in its journal Networks and Spatial Economics.

    Volume (Year): 6 (2006)
    Issue (Month): 2 (June)
    Pages: 81-96

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    Handle: RePEc:kap:netspa:v:6:y:2006:i:2:p:81-96

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    Web page: http://www.springerlink.com/link.asp?id=106607

    Related research

    Keywords: Confidence intervals; Willingness to pay; Mode choice;

    References

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    1. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, Spring.
    2. Jara-Díaz, Sergio R. & Videla, Jorge, 1989. "Detection of income effect in mode choice: Theory and application," Transportation Research Part B: Methodological, Elsevier, vol. 23(6), pages 393-400, December.
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    Cited by:
    1. Bliemer, Michiel C.J. & Rose, John M., 2013. "Confidence intervals of willingness-to-pay for random coefficient logit models," Transportation Research Part B: Methodological, Elsevier, vol. 58(C), pages 199-214.
    2. Heng Sun & Wayne Forsythe & Nigel Waters, 2007. "Modeling Urban Land Use Change and Urban Sprawl: Calgary, Alberta, Canada," Networks and Spatial Economics, Springer, vol. 7(4), pages 353-376, December.

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