A Discrete-continuous Model of Households’ Vehicle Choice and Usage, with an Application to the Effects of Residential Density

This paper develops a new method to solve multivariate discrete-continuous problems and applies the model to measure the influence of residential density on households’ vehicle fuel efficiency and usage choices. Traditional discrete-continuous modelling of vehicle holding choice and vehicle usage becomes unwieldy with large numbers of vehicles and vehicle categories. I propose a more flexible method of modelling vehicle holdings in terms of number of vehicles in each category, using a Bayesian multivariate ordinal response system. I also combine the multivariate ordered equations with Tobit equations to jointly estimate vehicle type/usage demand in a reduced form, offering a simpler alternative to the traditional discrete/continuous analysis. Using the 2001 National Household Travel Survey data, I find that increasing residential density reduces households’ truck holdings and utilization in a statistically significant but economically insignificant way. The results are broadly consistent with those from a model derived from random utility maximization. The method developed above can be applied to other discrete-continuous problems.