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A simplified and practical alternative way to recognise the role of household characteristics in determining an individual’s preferences: the case of automobile choice

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  • David A. Hensher

    (The University of Sydney Business School)

  • Chinh Ho

    (The University of Sydney Business School)

  • Matthew J. Beck

    (The University of Sydney Business School)

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.

Suggested Citation

  • David A. Hensher & Chinh Ho & Matthew J. Beck, 2017. "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, Springer, vol. 44(1), pages 225-240, January.
    • Handle: RePEc:kap:transp:v:44:y:2017:i:1:d:10.1007_s11116-015-9635-9
    DOI: 10.1007/s11116-015-9635-9
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    References listed on IDEAS

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    1. André de Palma & Nathalie Picard & Ignacio Inoa, 2014. "Discrete choice decision-making with multiple decision-makers within the household," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 16, pages 363-382, Edward Elgar Publishing.
    2. Matthew J. Beck & Caspar G. Chorus & John M. Rose & David A. Hensher, 2013. "Vehicle Purchasing Behaviour of Individuals and Groups: Regret or Reward?," Journal of Transport Economics and Policy, University of Bath, vol. 47(3), pages 475-492, September.
    3. Zhang, Junyi & Fujiwara, Akimasa, 2006. "Representing household time allocation behavior by endogenously incorporating diverse intra-household interactions: A case study in the context of elderly couples," Transportation Research Part B: Methodological, Elsevier, vol. 40(1), pages 54-74, January.
    4. 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.
    5. Hensher,David A. & Rose,John M. & Greene,William H., 2015. "Applied Choice Analysis," Cambridge Books, Cambridge University Press, number 9781107465923.
    6. Zhang, Junyi & Kuwano, Masashi & Lee, Backjin & Fujiwara, Akimasa, 2009. "Modeling household discrete choice behavior incorporating heterogeneous group decision-making mechanisms," Transportation Research Part B: Methodological, Elsevier, vol. 43(2), pages 230-250, February.
    7. Matthew Beck & John Rose & David Hensher, 2011. "Behavioural responses to vehicle emissions charging," Transportation, Springer, vol. 38(3), pages 445-463, May.
    8. David Hensher & Matthew Beck & John Rose, 2011. "Accounting for Preference and Scale Heterogeneity in Establishing Whether it Matters Who is Interviewed to Reveal Household Automobile Purchase Preferences," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 49(1), pages 1-22, May.
    9. David A. Hensher & John M. Rose, 2012. "The Influence of Alternative Acceptability, Attribute Thresholds and Choice Response Certainty on Automobile Purchase Preferences," Journal of Transport Economics and Policy, University of Bath, vol. 46(3), pages 451-468, September.
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    Cited by:

    1. André de Palma & Nathalie Picard & Robin Lindsey, 2021. "Activity and Transportation Decisions within Households," Working Papers of BETA 2021-37, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    2. Boto-García, David & Mariel, Petr & Baños-Pino, José Francisco, 2023. "Intra-household bargaining for a joint vacation," Journal of choice modelling, Elsevier, vol. 47(C).
    3. Hackbarth, André & Madlener, Reinhard, 2018. "Combined Vehicle Type and Fuel Type Choices of Private Households: An Empirical Analysis for Germany," FCN Working Papers 17/2018, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised May 2019.

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