Lecture

Latent variables in choice models: Optima case study

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Description

This lecture presents a case study on the Optima project in Switzerland from 2009-2010, analyzing the impact of attitudes on mode choice using factor analysis and structural equations, focusing on car-loving attitudes and the value of time in transportation decisions.

In MOOC

Selected Topics on Discrete Choice

The logit model is the workhorse of choice modelers. But it has some limitations. In particular, some assumptions used to derive it may not be consistent with the behavioral reality. It may lead to erroneous forecast. We illustrated using the so-called "red bud-blue bus" paradox, and Multivariate Extre Value models, addressing some of these issues, are introduced. The sampling procedure used to collect choice data has a critical impact on the model estimation procedure. We introduce classical sampling proc

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Related concepts (28)

Factor analysis

Factor analysis is a statistical method used to describe variability among observed, correlated variables in terms of a potentially lower number of unobserved variables called factors. For example, it is possible that variations in six observed variables mainly reflect the variations in two unobserved (underlying) variables. Factor analysis searches for such joint variations in response to unobserved latent variables.

Confirmatory factor analysis

In statistics, confirmatory factor analysis (CFA) is a special form of factor analysis, most commonly used in social science research. It is used to test whether measures of a construct are consistent with a researcher's understanding of the nature of that construct (or factor). As such, the objective of confirmatory factor analysis is to test whether the data fit a hypothesized measurement model. This hypothesized model is based on theory and/or previous analytic research.

Structural equation modeling

Structural equation modeling (SEM) is a diverse set of methods used by scientists doing both observational and experimental research. SEM is used mostly in the social and behavioral sciences but it is also used in epidemiology, business, and other fields. A definition of SEM is difficult without reference to technical language, but a good starting place is the name itself. SEM involves a model representing how various aspects of some phenomenon are thought to causally connect to one another.

Latent and observable variables

In statistics, latent variables (from Latin: present participle of lateo, “lie hidden”) are variables that can only be inferred indirectly through a mathematical model from other observable variables that can be directly observed or measured. Such latent variable models are used in many disciplines, including political science, demography, engineering, medicine, ecology, physics, machine learning/artificial intelligence, bioinformatics, chemometrics, natural language processing, management, psychology and the social sciences.

Rational choice theory

Rational choice theory refers to a set of guidelines that help understand economic and social behaviour. The theory originated in the eighteenth century and can be traced back to political economist and philosopher, Adam Smith. The theory postulates that an individual will perform a cost-benefit analysis to determine whether an option is right for them. It also suggests that an individual's self-driven rational actions will help better the overall economy. Rational choice theory looks at three concepts: rational actors, self interest and the invisible hand.

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