IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20170067.html
   My bibliography  Save this paper

Discrete Choice Models for Commuting Interactions

Author

Listed:
  • Jan (J.) Rouwendal

    () (Vrije Universiteit Amsterdam; Tinbergen Institute, The Netherlands)

  • Or Levkovich

    () (Vrije Universiteit Amsterdam)

  • Ismir Mulalic

    () (DTU, KRAKS)

Abstract

An emerging quantitative spatial economics literature models commuting interactions by a gravity equation that is mathematically equivalent to a multinomial logit model. This model is widely viewed as restrictive because of the independence of irrelevant alternatives (IIA) property that links substitution behavior in response to changes in the attractiveness of choice alternatives to choice probabilities in a mechanistic way. This is relevant for counterfactual analysis. In this paper we examine the appropriateness of the commuting model from a theoretical as well as an empirical point of view. We show that conventional specification tests of the multinomial logit model are of limited use when alternative specific constants are used, as is common in the recent literature, and offer no information with respect to the validity of IIA. In particular, we show that maximum likelihood estimation of relevant nested logit model is impossible because the crucial parameters are not identified. We discuss cross-nested and mixed logit as alternatives. We argue that a comparison between predicted and actual changes in commuting flows in response to a change in the attractiveness of choice alternatives provides a more informative test for the validity of the multinomial logit model for commuting interaction and report the results of such a test – as well as others – for data referring to Copenhagen.

Suggested Citation

  • Jan (J.) Rouwendal & Or Levkovich & Ismir Mulalic, 2017. "Discrete Choice Models for Commuting Interactions," Tinbergen Institute Discussion Papers 17-067/VIII, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20170067
    as

    Download full text from publisher

    File URL: http://papers.tinbergen.nl/17067.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Monte, Ferdinando & Redding, Stephen J. & Rossi-Hansberg, Esteban, 2015. "Commuting, Migration and Local Employment Elasticities," CEPR Discussion Papers 10933, C.E.P.R. Discussion Papers.
    2. Rouwendal, Jan, 1998. "Search Theory, Spatial Labor Markets, and Commuting," Journal of Urban Economics, Elsevier, vol. 43(1), pages 1-22, January.
    3. Small, Kenneth A & Hsiao, Cheng, 1985. "Multinomial Logit Specification Tests," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 619-627, October.
    4. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    5. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    quantitative spatial economics; multinomial logit; mixed logit; independence of irrelevant alternatives;

    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:tin:wpaper:20170067. 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: (Tinbergen Office +31 (0)10-4088900). General contact details of provider: http://edirc.repec.org/data/tinbenl.html .

    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.