Publications

Out With The Old–In With The New: Would New Social Preference Weights For Eq-5d Inevitably Require A Reappraisal of Previous Cost-Effectiveness Determinations?

Objectives Social preferences are widely used in economic evaluation required by regulatory agencies. In the UK, NICE requires the use of EQ-5D and its associated set of TTO preference weights for computing QALYs. The weights in question date back nearly two decades. It is reasonable to question whether they continue to represent contemporary social preferences. Were a revised set of EQ-5D weights to be produced then would this necessitate the revision of all past appraisal decisions? This paper presents the 1stphase of work designed to address that question. Methods The ICER is defined by the ratio of marginal cost (ΔC) /marginal benefit (ΔB). For a given ΔC the ICER falls as ΔB increases. For a given threshold (λ) and for a fixed incremental cost (ΔC), there is a minimum health benefit ΔBmin (given by ΔC/λ) which must be achieved to produce an ICER that comes below that threshold limit. TTO-weighted scores were computed for all 243 health states defined by the 3-level version of EQ-5D. A difference matrix was created in which D (i, j) contains the numeric difference between the ith and jth state. The number of differences below a given ΔBminwas computed for each column (health state). Threshold values were varied (£20,000-£50,000). Cost differences were varied (£500-£10,000). Results Less than 10% of health state value differences failed to meet the minimum ΔBmin of 0.0125 (ΔC =£500; λ=£20,000) indicating susceptability to changes in health state value, however this proportion rose to 57% for higher incremental costs (e. g. ΔC =£3,000). 81/243 health states account for 50% of the differences that exceed ΔBminat all tested levels of ΔC and λ. Graphical representation of these Results can be used to assess the need for reappraisal. Conclusions For higher cost interventions, relatively small differences in EQ-5D weights can generate ICERs with the propensity to reverse previous cost-effectiveness decisions.

Kind, P., & Meads, D. M. (2014). Out With The Old–In With The New: Would New Social Preference Weights For Eq-5d Inevitably Require A Reappraisal of Previous Cost-Effectiveness Determinations? Value in Health, 17(7), A439.

Analytic approximations for computing probit choice probabilities.

The multinomial probit model has long been used in transport applications as the basis for mode- and route-choice in computing network flows, and in other choice contexts when estimating preference parameters. It is well known that computation of the probit choice probabilities presents a significant computational burden, since they are based on multivariate normal integrals. Various methods exist for computing these choice probabilities, though standard Monte Carlo is most commonly used. In this article we compare two analytical approximation methods (Mendell–Elston and Solow–Joe) with three Monte Carlo approaches for computing probit choice probabilities. We systematically investigate a wide range of parameter settings and report on the accuracy and computational efficiency of each method. The findings suggest that the accuracy and efficiency of an optimally ordered Mendell–Elston analytic approximation method offers great potential for wider use.

Connors, R. D., Hess, S., & Daly, A. (2014). Analytic approximations for computing probit choice probabilities. Transportmetrica A: Transport Science, 10(2), 119-139.

 

Indifference based Value of Time measures for Random Regret Minimisation models.

The notion of Value of Time (VoT) is a cornerstone of discrete choice based economic appraisal in transportation. Its derivation and interpretation in the context of Random Utility Maximisation (RUM) models with linear-additive utility functions is straightforward and well known. The choice set-composition effects and semi-compensatory behaviour emphasised in the Random Regret Minimisation (RRM) model induces deviations from this basic VoT specification. This paper reviews and provides new insights into the RRM based VoT measure developed by Chorus (2012a). It defines the theoretical properties of the measure using the micro-economic notion of indifference, and provides insights into the limitations of the measure with respect to deriving individual and aggregate welfare measures. Additionally, the representative consumer approach is adopted to derive an alternative VoT measure, which is behaviourally more complete than the Chorus (2012a) measure. Although alleviating some of the restrictions, the measure has its own theoretical disadvantage. The main contribution of the paper can therefore be summarised as the generation of the necessary insights into the extent to which RRM-based VoT measures can be applied for the purpose of economic appraisal.

Dekker, T. (2014), Indifference based Value of Time measures for Random Regret Minimisation models. Journal of Choice Modelling, 12, pp 10-20.

Contrasting imputation with a latent variable approach to dealing with missing income in choice models.

Income is a key variable in many choice models. It is also one of the most salient examples of a variable affected by data problems. Issues with income arise as measurement errors in categorically captured income, correlation between stated income and unobserved variables, systematic over- or under-statement of income and missing income values for those who refuse to answer or do not know their (household) income. A common approach for dealing especially with missing income is to use imputation based on the relationship among those who report income between their stated income for reporters and their socio-demographic characteristics. A number of authors have also recently put forward a latent variable treatment of the issue, which has theoretical advantages over imputation, not least by drawing not just on data on stated income for reporters, but also choice behaviour of all respondents. We contrast this approach empirically with imputation as well as simpler approaches in two case studies, one with stated preference data and one with revealed preference data. Our findings suggest that, at least with the data at hand, the latent variable approach produces similar results to imputation, possibly an indication of non-reporters of income having similar income distributions from those who report it. But in other data sets the efficiency advantage over imputation could help in revealing issues in the complete and accurate reporting of income.

Hess, S., Sanko, N., Dumont, J. & Daly, A.J. (2014), Contrasting imputation with a latent variable approach to dealing with missing income in choice models. Journal of Choice Modelling, 12, pp 47-57.

Contrasts between utility maximisation and regret minimisation in the presence of opt out alternatives.

An increasing number of studies of choice behaviour are looking at Random Regret Minimisation (RRM) as an alternative to the well established Random Utility Maximisation (RUM) framework. Empirical evidence tends to show small differences in performance between the two approaches, with the implied preference between the models being dataset specific. In the present paper, we discuss how in the context of choice tasks involving an opt out alternative, the differences are potentially more clear cut. Specifically, we hypothesise that when opt out alternatives are framed as a rejection of all the available alternatives, this is likely to have a detrimental impact on the performance of RRM, while the performance of RUM suffers more than RRM when the opt out is framed as a respondent being indifferent between the alternatives on offer. We provide empirical support for these hypotheses through two case studies, using the two different types of opt out alternatives. Our findings suggest that analysts need to carefully evaluate their choice of model structure in the presence of opt out alternatives, while any a priori preference for a given model structure should be taken into account in survey framing.

Hess, S., Beck, M. & Chorus, C. (2014), Contrasts between utility maximisation and regret minimisation in the presence of opt out alternatives. Transportation Research Part A, 66, pp 1-12.

Understanding the formation and influence of attitudes in patients’ treatment choices for lower back pain: testing the benefits of a hybrid choice model approach.

A growing number of studies across different fields are making use of a new class of choice models, labelled variably as hybrid model structures or integrated choice and latent variable models, and incorporating the role of attitudes in decision making. To date, this technique has not been used in health economics. The present paper looks at the formation of such attitudes and their role in patients’ treatment choices in the context of low back pain. We use stated choice data collected from a sample of 561 patients with 348 respondents referred to a regional spine centre in Middelfart, Denmark in spring/summer 2012. We show how the hybrid model structure is able to make a link between attitudinal questions and treatment choices, and also explains variation of these attitudes across key socio-demographic groups. However, we also show how, in this case, only a small share of the overall heterogeneity is linked to the latent attitude construct. Despite their growing popularity, the key findings of the advanced model, despite a greater insight into the drivers of attitudes and small gains in efficiency, are no different from standard approaches which remain easier to apply.

Kløjgaard, M. & Hess, S.  (2014), Understanding the formation and influence of attitudes in patients’ treatment choices for lower back pain: testing the benefits of a hybrid choice model approach. Social Science & Medicine, 114, pp 138-150.

Temporal transfer of models of mode and destination choice for the Greater Toronto and Hamilton area.

Transport planning relies extensively on forecasts of traveler behavior over horizons of 20 years and more. Implicit in such forecasts is the assumption that travelers’ tastes, as represented by the behavioral model parameters, are constant over time. In technical terms, this assumption is referred to as the “temporal transferability” of the models. This paper summarizes the findings from a literature review that demonstrates there is little evidence about the transferability of mode-destination models over typical forecasting horizons. The literature review shows a relative lack of empirical studies given the importance of the issue. To provide further insights and evidence, models of commuter mode-destination choice been developed from household interview data collected across the Greater Toronto and Hamilton Area in 1986, 1996, 2001, and 2006. The analysis demonstrates that improving model specification improves the transferability of the models, and in general the transferability declines as the transfer period increases. The transferability of the level-of-service parameters is higher than transferability of the cost parameters, which has important implications when considering the accuracy of forecasts for different types of policy. The transferred models over-predict the key change in mode share over the transfer period—specifically, the shift from local transit to auto driver between 1986 and 1996—but under-predict the growth in commuting tour lengths over the same period.

Fox, J., Daly, A., Hess, S. & Miller, E. (2014), Temporal transfer of models of mode and destination choice for the Greater Toronto and Hamilton area. Journal of Transport and Land Use, 7 (2), pp 41-62.

Heterogeneity assumptions in the specification of bargaining models: a study of household level trade-offs between commuting time and salary.

With many real world decisions being made in conjunction with other decision makers, or single agent decisions having an influence on other members of the decision maker’s immediate entourage, there is strong interest in studying the relative weight assigned to different agents in such contexts. In the present paper, we focus on the case of one member of a two person household being asked to make choices affecting the travel time and salary of both members. We highlight the presence of significant heterogeneity across individuals not just in their underlying sensitivities, but also in the relative weight they assign to their partner, and show how this weight varies across attributes. This is in contrast to existing work which uses weights assigned to individual agents at the level of the overall utility rather than for individual attributes. We also show clear evidence of a risk of confounding between heterogeneity in marginal sensitivities and heterogeneity in the weights assigned to each member. We show how this can lead to misleading model results, and argue that this may also explain past results showing bargaining or weight parameters outside the usual [0,1] range in more traditional joint decision making contexts. In terms of substantive results, we find that male respondents place more weight on their partner’s travel time, while female respondents place more weight on their partner’s salary.

O’Neill, V.L. & Hess, S. (2014), Heterogeneity assumptions in the specification of bargaining models: a study of household level trade-offs between commuting time and salary. Transportation, 41 (4), pp 745-763.

 

Incorporating needs-satisfaction in a discrete choice model of leisure activities

In this paper we extend the behavioural scope of discrete choice models for leisure activity-travel choices. More specifically, we investigate to what extent choices for leisure activities and related travels are driven by the satisfaction of needs. In addition to conventional attributes (such as activity costs), our regret based discrete choice model incorporates latent variables representing the anticipated level of individual needs-satisfaction by a particular leisure activity. The latent variables are calibrated with the help of subjective indicators of needs-satisfaction associated with the leisure activities. Results show that needs-satisfaction allows us to decompose a substantial share of the unobserved heterogeneity in leisure activity-travel decisions across respondents. Identifying the structural drivers of anticipated needs-satisfaction also enables a better prediction of leisure activity choice.

Dekker, T., Hess, S., Arentze, T. & Chorus, C.G. (2014), Incorporating needs-satisfaction in a discrete choice model of leisure activities, Journal of Transport Geography, 21, pp 36-41.

The value of small time savings for non-business travel.

The paper addresses the issue of how small time savings are handled in the appraisal of transport proposals. A review is made of the policy of eleven governments and this is followed by a critical discussion of the treatment of small time changes that have been estimated in Stated Choice (SC) studies, from the 1960s until the present day. By examining the reasons for the use of SC experiments in the past and the method’s shortcomings in understanding the values of small time savings, this paper concludes there is a strong case for reconsidering the use of Revealed Preference (RP) data.

Daly, A., Tsang, F. & Rohr, C. (2014), The value of small time savings for non-business travel. Transport Economics and Policy, 48 (2), pp 205-218.

Traffic Information Interface Development for Route Choice Decision.

In this paper, a method has been developed based on historic traffic data (vehicle speed), which helps the commuters to choose routes by their intelligence knowing the traffic conditions in Google maps. Data has been collected on basis of video analysis from several segments between Tuker Bazar and Bandar Bazar route. For each of the video footage, a reference length has been recorded with measurement tape for use in video analysis. Software has been also developed based on Java language to get the traffic information from historic data, which shows the output as images consisting of traffic speed details on the available routes by giving day and time limit as inputs. The developed models provide useful insights and helpful for the policy makers that can lead to the reduction of traffic congestion and increase the scope of intelligence of the road users, at least for the underdeveloped or developing country where navigation is still unavailable.

Chowdhury, M. S. A., Haque, M. B. & Sarwar, G. (2014), Traffic Information Interface Development for Route Choice Decision. Transport and Telecommunication Journal, 15 (2), pp 91-96.

Impact of unimportant attributes in stated choice surveys.

Despite growing interest in the notion that respondents in stated choice surveys may make their decisions on the basis of only a subset of the presented attributes, the impact of any unimportant attributes on the estimates of other valuations is somewhat unclear. This paper presents evidence from a two stage survey where the second stage eliminates attributes deemed unimportant in the first stage. Our analysis shows no evidence of systematic differences between the results of the two stages. This leads to the conclusion that, up to a point where respondent burden may become an issue, analysts should include all attributes that may be relevant, and allow the respondent to filter out those that play no role.

Hess, S. (2014), Impact of unimportant attributes in stated choice surveys. European Journal of Transport and Infrastructure Research, 14 (4), pp 349-361.

Do birds of a feather flock together? The impact of ethnic segregation preferences on neighbourhood choice.

Ethnic residential segregation can arise from voluntary or imposed clustering of some ethnicities in specific urban areas. However, up to now it has been difficult to untangle the real causes underlying the segregation phenomena. In particular, voluntary segregation preferences could not be revealed from the observed location choices given the existence of constraints in the real housing market. This study aims at analysing the voluntary segregation drivers through a stated preferences experiment of neighbourhood choice. This method obviates the choice-constraint issue by allowing a hypothetically free choice of alternative urban locations. The results suggest that ethnic preferences exist, positive for co-national neighbours and negative for other foreign groups. However, such preferences do not constitute a major location choice driver given relatively modest willingness-to-pay for ethnic neighbourhood characteristics. Certain heterogeneity in preferences for higher concentration of own co-nationals is captured for households of different origins and educational attainment.

Ibraimovic, T., & Masiero, L. (2014). Do birds of a feather flock together? The impact of ethnic segregation preferences on neighbourhood choice. Urban Studies, 51(4), 693-711.

A question of taste: recognising the role of latent preferences and attitudes in analysing food choices.

There has long been substantial interest in understanding consumer food choices, where a key complexity in this context is the potentially large amount of heterogeneity in tastes across individual consumers, as well as the role of underlying attitudes towards food and cooking. The present paper underlines that both tastes and attitudes are unobserved, and makes the case for a latent variable treatment of these components. Using empirical data collected in Northern Ireland as part of a wider study to elicit intra-household trade-offs between home-cooked meal options, we show how these latent sensitivities and attitudes drive both the choice behaviour as well as the answers to supplementary questions. We find significant heterogeneity across respondents in these underlying factors and show how incorporating them in our models leads to important insights into preferences.

O’Neill, V.L., Hess, S. & Campbell, D. (2014), A question of taste: recognising the role of latent preferences and attitudes in analysing food choices. Food Quality and Preferences, 32C, pp 299-310.

 

 

Practical solutions for sampling alternatives in large scale models.

Many large-scale real-world transport applications have choice sets that are so large as to make model estimation and application computationally impractical. The ability to estimate models on subsets of the alternatives is thus of great appeal, and correction approaches have existed since the late 1970s for the simple multinomial logit (MNL) model. However, many of these models in practice rely on nested logit specifications, for example, in the context of the joint choice of mode and destination. Recent research has put forward solutions for such generalized extreme value (GEV) structures, but these structures remain difficult to apply in practice. This paper puts forward a simplification of the GEV method for use in computationally efficient implementations of nested logit. The good performance of this approach is illustrated with simulated data, and additional insights into sampling error are also provided with different sampling strategies for MNL.

Daly, A., Hess, S. & Dekker, T. (2014), Practical solutions for sampling alternatives in large scale models. Transportation Research Record, 2429 (1), pp 148-156.

 

Understanding air travellers’ trade-offs between connecting flights and surface access characteristics.

This paper reports on a study which seeks to improve our understanding of how people choose between different kinds of flight at competing airports, and how their choices are affected by access conditions. In particular, using stated choice data collected in Scotland, it investigates whether improving surface access to regional airports that are in relatively close proximity to one another (Glasgow and Edinburgh) leads people to avoid taking indirect flights from their nearest airport in favour of direct flights from an alternative airport. In line with expectations, our estimation results from Cross-Nested Logit models show strong aversion to connecting flights, resulting in a willingness to either pay higher fares for direct flights or accept non-trivial increases in access time. For the latter, even without the potential new direct rail link between the two airports, current access times are such that a scenario where direct flights were only available at the non-home airport, a substantial share of passengers would choose to travel from the alternative airport.

Johnson, D., Hess, S. & Matthews, B. (2014), Understanding air travellers’ trade-offs between connecting flights and surface access characteristics. Journal of Air Transport Management, 34, pp 70-77.