IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v45y2011i4p362-374.html
   My bibliography  Save this article

Correcting for endogeneity in behavioral choice models with social influence variables

Author

Listed:
  • Walker, Joan L.
  • Ehlers, Emily
  • Banerjee, Ipsita
  • Dugundji, Elenna R.

Abstract

While psychologists and behavioral economists emphasize the importance of social influences, an outstanding issue is how to capture such influences in behavioral models used to inform urban planning and policy. In this paper we focus on operational models that do not require explicit knowledge of the individual networks of decision makers. We employ a field effect variable to capture social influences, which is calculated as the percent of population in the peer group that has chosen the specific alternative. We define the peer group based on socio-economic status and spatial proximity of residential location. As in behavioral economics and psychology, the concept is that one is influenced by the choices made by one's peers. However, using such a social influence variable in a behavioral model causes complications because it is likely endogenous; unobserved factors that impact the peer group also influence the decision maker, yielding correlation between the field effect variable and the error. The contribution of this paper is the use of the Berry, Levinsohn, and Pakes (BLP) method to correct the endogeneity in a choice model. The two-stage BLP introduces constants for each peer group to remove the endogeneity from the choice model (where it is difficult to deal with) and insert it into a linear regression model (where endogeneity is relatively easier to deal with). We test the method using a mode choice data set from the Netherlands and readily available software and find there is an upward bias of the field effect parameter when endogeneity is not corrected. The procedure outlined presents a practical and tractable method for incorporating social influences in choice models.

Suggested Citation

  • Walker, Joan L. & Ehlers, Emily & Banerjee, Ipsita & Dugundji, Elenna R., 2011. "Correcting for endogeneity in behavioral choice models with social influence variables," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(4), pages 362-374, May.
  • Handle: RePEc:eee:transa:v:45:y:2011:i:4:p:362-374
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965-8564(11)00011-5
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 531-542.
    2. Sivaramakrishnan Srinivasan & Chandra Bhat, 2005. "Modeling household interactions in daily in-home and out-of-home maintenance activity participation," Transportation, Springer, vol. 32(5), pages 523-544, September.
    3. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, December.
    4. Elenna Dugundji & Antonio Páez & Theo Arentze, 2008. "Social networks, choices, mobility, and travel," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 35(6), pages 956-960, November.
    5. Antonio Páez & Darren M Scott, 2007. "Social influence on travel behavior: a simulation example of the decision to telecommute," Environment and Planning A, Pion Ltd, London, vol. 39(3), pages 647-665, March.
    6. Antonio Páez & Darren M Scott & Erik Volz, 2008. "A discrete-choice approach to modeling social influence on individual decision making," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 35(6), pages 1055-1069, November.
    7. Arentze, Theo A. & Timmermans, Harry J.P., 2009. "A need-based model of multi-day, multi-person activity generation," Transportation Research Part B: Methodological, Elsevier, vol. 43(2), pages 251-265, February.
    8. William A. Brock & Steven N. Durlauf, 2001. "Discrete Choice with Social Interactions," Review of Economic Studies, Oxford University Press, vol. 68(2), pages 235-260.
    9. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    10. Steven Berry & James Levinsohn & Ariel Pakes, 2004. "Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 68-105, February.
    11. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-959, July.
    12. John Gliebe & Frank Koppelman, 2005. "Modeling household activity–travel interactions as parallel constrained choices," Transportation, Springer, vol. 32(5), pages 449-471, September.
    13. Scott, Darren M. & Kanaroglou, Pavlos S., 2002. "An activity-episode generation model that captures interactions between household heads: development and empirical analysis," Transportation Research Part B: Methodological, Elsevier, vol. 36(10), pages 875-896, December.
    14. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    15. Fukuda, Daisuke & Morichi, Shigeru, 2007. "Incorporating aggregate behavior in an individual's discrete choice: An application to analyzing illegal bicycle parking behavior," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(4), pages 313-325, May.
    16. Juan Antonio Carrasco & Bernie Hogan & Barry Wellman & Eric J Miller, 2008. "Collecting social network data to study social activity-travel behavior: an egocentric approach," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 35(6), pages 961-980, November.
    17. K W Axhausen, 2008. "Social networks, mobility biographies, and travel: survey challenges," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 35(6), pages 981-996, November.
    18. William A. Brock & Steven N. Durlauf, 2002. "A Multinomial-Choice Model of Neighborhood Effects," American Economic Review, American Economic Association, pages 298-303.
    19. Timmermans, Harry J.P. & Zhang, Junyi, 2009. "Modeling household activity travel behavior: Examples of state of the art modeling approaches and research agenda," Transportation Research Part B: Methodological, Elsevier, vol. 43(2), pages 187-190, February.
    20. K W Axhausen, 2008. "Social Networks, Mobility Biographies, and Travel: Survey Challenges," Environment and Planning B, , vol. 35(6), pages 981-996, December.
    21. Kenneth E. Train & Clifford Winston, 2007. "Vehicle Choice Behavior And The Declining Market Share Of U.S. Automakers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(4), pages 1469-1496, November.
    22. Daniel McFadden, 2001. "Economic Choices," American Economic Review, American Economic Association, vol. 91(3), pages 351-378, June.
    23. Mark Bradley & Peter Vovsha, 2005. "A model for joint choice of daily activity pattern types of household members," Transportation, Springer, vol. 32(5), pages 545-571, September.
    24. Masanao Aoki, 1995. "Economic Fluctuations With Interactive Agents: Dynamic And Stochastic Externalities," The Japanese Economic Review, Japanese Economic Association, vol. 46(2), pages 148-165, June.
    25. Frank Goetzke & Tilmann Rave, 2011. "Bicycle Use in Germany: Explaining Differences between Municipalities with Social Network Effects," Urban Studies, Urban Studies Journal Limited, vol. 48(2), pages 427-437, February.
    26. Kang, Hejun & Scott, Darren M., 2010. "Exploring day-to-day variability in time use for household members," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(8), pages 609-619, October.
    27. John Gliebe & Frank Koppelman, 2002. "A model of joint activity participation between household members," Transportation, Springer, vol. 29(1), pages 49-72, February.
    28. Elenna R Dugundji & László Gulyás, 2008. "Sociodynamic discrete choice on networks in space: impacts of agent heterogeneity on emergent outcomes," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 35(6), pages 1028-1054, November.
    29. J. Miguel Villas-Boas & Russell S. Winer, 1999. "Endogeneity in Brand Choice Models," Management Science, INFORMS, vol. 45(10), pages 1324-1338, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thomas de Graaff & Jan Rouwendal & Wim Bernasco & Wouter Steenbeek, 2012. "Social interaction and the spatial concentration of criminality," ERSA conference papers ersa12p634, European Regional Science Association.
    2. Chorus, Caspar G., 2015. "Models of moral decision making: Literature review and research agenda for discrete choice analysis," Journal of choice modelling, Elsevier, vol. 16(C), pages 69-85.
    3. Morrison, Geoffrey M. & Lin Lawell, C.-Y. Cynthia, 2016. "Driving in force: The influence of workplace peers on commuting decisions on U.S. military bases," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 22-40.
    4. Moshe Ben-Akiva & André Palma & Daniel McFadden & Maya Abou-Zeid & Pierre-André Chiappori & Matthieu Lapparent & Steven Durlauf & Mogens Fosgerau & Daisuke Fukuda & Stephane Hess & Charles Manski & Ar, 2012. "Process and context in choice models," Marketing Letters, Springer, vol. 23(2), pages 439-456, June.
    5. Carlos Carrion & Nebiyou Tilahun & David Levinson, 2011. "Monte Carlo Simulation of Adaptive Stated Preference Survey with a case study: Effects of Aggregate Mode Shares on Individual Mode Choice," Working Papers 000093, University of Minnesota: Nexus Research Group.
    6. Kroesen, Maarten, 2015. "Do partners influence each other’s travel patterns? A new approach to study the role of social norms," Transportation Research Part A: Policy and Practice, Elsevier, vol. 78(C), pages 489-505.
    7. Kim, Jinhee & Rasouli, Soora & Timmermans, Harry, 2014. "Expanding scope of hybrid choice models allowing for mixture of social influences and latent attitudes: Application to intended purchase of electric cars," Transportation Research Part A: Policy and Practice, Elsevier, vol. 69(C), pages 71-85.
    8. Maness, Michael & Cirillo, Cinzia, 2016. "An indirect latent informational conformity social influence choice model: Formulation and case study," Transportation Research Part B: Methodological, Elsevier, vol. 93(PA), pages 75-101.
    9. repec:eee:transa:v:99:y:2017:i:c:p:61-79 is not listed on IDEAS
    10. Louis Grange & Felipe González & Ignacio Vargas & Rodrigo Troncoso, 2015. "A Logit Model With Endogenous Explanatory Variables and Network Externalities," Networks and Spatial Economics, Springer, vol. 15(1), pages 89-116, March.
    11. repec:eee:transa:v:100:y:2017:i:c:p:88-104 is not listed on IDEAS
    12. Zanni, Alberto M. & Ryley, Tim J., 2015. "The impact of extreme weather conditions on long distance travel behaviour," Transportation Research Part A: Policy and Practice, Elsevier, vol. 77(C), pages 305-319.
    13. Yoon, Seo Youn & Ravulaparthy, Srinath K. & Goulias, Konstadinos G., 2014. "Dynamic diurnal social taxonomy of urban environments using data from a geocoded time use activity-travel diary and point-based business establishment inventory," Transportation Research Part A: Policy and Practice, Elsevier, vol. 68(C), pages 3-17.
    14. Faghih-Imani, Ahmadreza & Eluru, Naveen, 2016. "Determining the role of bicycle sharing system infrastructure installation decision on usage: Case study of montreal BIXI system," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 685-698.
    15. Sherwin, Henrietta & Chatterjee, Kiron & Jain, Juliet, 2014. "An exploration of the importance of social influence in the decision to start bicycling in England," Transportation Research Part A: Policy and Practice, Elsevier, vol. 68(C), pages 32-45.
    16. Fernández-Antolín, Anna & Guevara, C. Angelo & de Lapparent, Matthieu & Bierlaire, Michel, 2016. "Correcting for endogeneity due to omitted attitudes: Empirical assessment of a modified MIS method using RP mode choice data," Journal of choice modelling, Elsevier, vol. 20(C), pages 1-15.
    17. Hitayezu, Patrick & Wale, Edilegnaw & Ortmann, Gerald, 2015. "Assessing Agricultural Land Use Change in the Midlands Region of KwaZulu-Natal, South Africa: Application of Mixed-Multinomial Logit," 2015 Conference, August 9-14, 2015, Milan, Italy 211736, International Association of Agricultural Economists.
    18. Konstadinos G. Goulias & Ram M. Pendyala, 2014. "Choice context," Chapters,in: Handbook of Choice Modelling, chapter 5, pages 101-130 Edward Elgar Publishing.
    19. Zhang, Junyi, 2014. "Revisiting residential self-selection issues: A life-oriented approach," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 7(3), pages 29-45.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:45:y:2011:i:4:p:362-374. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.