Accommodating Heterogeneity
and Heteroscedasticity in Intercity
Travel Mode Choice Model
Formulation and Application to HoNam, South Korea,
High-Speed Rail Demand Analysis
Jang-Ho Lee, Kyung-Soo Chon, and ChangHo Park
Multinomial logit models and nested logit models are limited in that they
cannot accommodate unobserved variations in travelers’ taste and they
do not have flexible substitution patterns among alternatives because of
the independence of irrelevant alternatives property. Taking this back-
ground into account, traffic demand analysts have recently used the
mixed logit model in many studies. Unfortunately, most of the studies in
the literature for joint analysis of revealed-preference (RP) and stated-
preference (SP) data could not simultaneously resolve the two limitations
just mentioned. The mixed logit framework is used to formulate an
intercity travel mode choice model for joint RP-SP analysis that accom-
modates the following behavioral considerations: (a) observed and un-
observed heterogeneity across individuals in response to level-of-service
(LOS) factors, (b) heteroscedasticity across alternatives, and (c) scale dif-
ferences between the RP and SP choice contexts. The mixed logit for-
mulation is estimated with the maximum simulated likelihood method
that employs quasi-random Halton draws. The formulation is applied
to examine the travel behavior responses of users of the HoNam, South
Korea, high-speed rail to changes in travel conditions. The empirical
results show that there is a significant heteroscedasticity across alter-
natives and a significant heterogeneity in response to LOS attributes
based on both observed and unobserved individual characteristics.
There is an improvement in the data-fit statistics when one introduces
heterogeneity and heteroscedasticity. These results highlight the need to
include heterogeneity and heteroscedasticity within the context of inter-
city travel mode choice modeling to assist policy decision making.
Since revealed-preference (RP) and stated-preference (SP) data have
their own advantages and disadvantages with respect to the esti-
mation of behavioral parameters of interest, joint RP-SP modeling
is needed in travel demand analysis (1). Also, Delphi survey re-
sults show that joint RP-SP modeling will be one of the top issues
concerning transport modeling in the future (2).
With reference to modeling framework, the multinomial logit
(MNL) model and the nested logit (NL) model have limitations in
that they cannot accommodate unobserved variations in travelers’
J.-H. Lee, Department of Railway Research, Korea Transport Institute, 2311 Daehwa,
Ilsan, Goyang, Gyeonggi, 411-701, South Korea. K.-S. Chon and C. Park, Depart-
ment of Urban Engineering, Seoul National University, Shillim-dong, Gwanak-gu,
Seoul, 151-742, South Korea.
Transportation Research Record: Journal of the Transportation Research Board,
No. 1898, TRB, National Research Council, Washington, D.C., 2004, pp. 69–78.
69
taste and they do not have flexible substitution patterns among alter-
natives because of the independence of irrelevant alternatives (IIA)
property.
Taking this background into account, traffic demand analysts
have recently used the mixed logit model in many studies. Unfortu-
nately, most of the studies in the literature for joint analysis of RP
and SP data could not simultaneously resolve the two limitations
just mentioned.
An intercity travel mode choice model for joint RP-SP analysis
is formulated that accommodates the following behavioral consid-
erations: (a) observed and unobserved (to an analyst) heterogene-
ity across individuals in response to level-of-service (LOS) factors,
(b) heteroscedasticity across alternatives, and (c) scale differences
between the RP and SP choice contexts.
The fundamental reasons for accommodating all three modeling
issues are as follows. First, an individual’s response to LOS attri-
butes affects his or her travel mode choice for a trip, and the response
varies across individuals on the basis of observed and unobserved
individual characteristics (e.g., the purpose of trip, vehicle owner-
ship). Second, the allowance to have unequal variances of the random
components in utilities with the different alternatives (a) overcomes
the IIA restriction of the commonly used MNL model and (b) per-
mits more flexibility in cross-elasticity structure than the MNL model
or the NL model does. Finally, since the RP and SP choice settings
are quite different from each other, there is no reason to believe that
the variance of unobserved factors in the RP setting will be identical
to that of unobserved factors in the SP settings. The scale difference
between the RP and SP choice contexts has been recognized and
accommodated for in almost all previous joint RP-SP analyses.
MODEL FORMULATION
Heterogeneity
According to Hensher and Button (2), heterogeneity effects refer to
observed and unobserved differences across decision makers in the
intrinsic preference for a choice alternative (preference heterogene-
ity) and in the sensitivity to characteristics of the choice alternatives
(response heterogeneity). Unobserved heterogeneity effects can be
accommodated by using the random-parameter structure.
Bhat (3) estimated an intercity travel mode choice model that
accommodates variations in response to LOS measures due to both
70
observed and unobserved individual characteristics. The model was
applied to examine the impact of improved rail service on weekday
business travel in the Toronto–Montreal corridor in Canada. Bhat
(4) also formulated a mixed logit model of multiday urban travel
mode choice that accommodates variations in mode preference and
response to LOS factors. The model was applied to examine the
travel mode choice of workers in the San Francisco Bay Area in
California. These two empirical results emphasize the need to
accommodate observed and unobserved heterogeneity across indi-
viduals in travel mode choice modeling. However, they do not apply
to joint RP-SP analysis.
Hensher and Greene (5) accommodated unobserved response
heterogeneity, along with interalternative correlation, in an RP-SP
study on vehicle type choices among conventional, electric, and
uncompressed natural gas–liquid natural gas (UNG-LNG) vehicles
in single-vehicle households. Bhat and Castelar (6 ) formulated and
applied a unified mixed logit framework for modeling RP and SP.
The model was applied to the analysis of congestion pricing in the
San Francisco Bay Area with the combined alternatives of travel
mode and departure time. The model accommodated unobserved
heterogeneity, interalternative error structure, and state dependence.
The empirical results emphasize the advantage of joint RP-SP analy-
sis and the need to include unobserved heterogeneity, flexible error
structure, and state dependence.
Heteroscedasticity
One of the basic assumptions of the MNL model is that the random
components of utilities with different alternatives are independent
and identically distributed (IID) with a Type I extreme value distri-
bution. However, the IID error structure assumption leaves the MNL
model saddled with the IIA property.
Bhat (7) formulated the heteroscedastic extreme value (HEV)
model, which assumes that the error terms are distributed with a Type
I extreme value distribution. The variances of the error term with alter-
natives are allowed to be different across all alternatives. The formu-
lated model is flexible enough to allow differential cross-elasticities
among alternatives. The model was applied to examine the impact
of improved rail service on intercity business travel in the Toronto–
Montreal corridor. Hensher et al. (1) applied the HEV model to esti-
mate an intercity travel mode choice model from combined RP-SP
data. The model was applied to examine the effect of high-speed
rail (HSR) service in the Sydney–Canberra corridor in Australia.
Recently, transport applications have used a mixed logit framework
to relax the IID error structure assumption. Bhat (8) accommodated
unobserved correlation across both dimensions in a two-dimensional
choice context. The model was applied to an analysis of travel mode
and departure time choice for home-based social-recreational trips.
Brownstone and Train (9) applied a mixed logit framework to model
households’ choice among vehicles powered with gas, methanol, com-
pressed natural gas (CNG), and electricity. Their specification allows
two additional error components, such as nonelectric vehicle and non-
CNG vehicle error components. Brownstone et al. (10) accommodated
both heteroscedasticity and correlation across alternatives on the basis
of the framework of a mixed logit model in joint RP-SP data analysis.
Walker (11) presented and empirically demonstrated a generalized
methodological framework that integrates the extensions of discrete
choice, including the factor-analytic logit kernel model. This study
shows that the logit-kernel formulation can accommodate random
parameters and heteroscedasticity by using RP data.
Transportation Research Record 1898
Scale Difference Between RP and SP
RP and SP data each have their own advantages and disadvantages,
because of which the two types of data are highly complementary,
and combined estimators can be used to draw on the advantages of
each type of data. Since the RP and SP choice settings are quite dif-
ferent from each other, the variance of unobserved components in
the RP setting can be different from that of unobserved components
in the SP setting (12). The scale difference between the RP and SP
choice contexts has been recognized and accommodated in almost
all previous joint RP-SP analyses.
Mixed Logit Model Formulation
A mixed logit framework is formulated that accommodates observed
and unobserved response heterogeneity, heteroscedasticity, and scale
difference between the RP and SP choice contexts. First, the observed
response heterogeneity represents the differences across individual
and trip characteristics. The unobserved response heterogeneity can
be accommodated by the random-parameter structure. Second, the
heteroscedasticity can be considered by using the factor-analytic
variance-covariance structure. Finally, the scale difference between
the RP and SP choice contexts can be accommodated by estimating
the scale parameter of the SP choice context, whereas the RP scale
parameter is normalized to 1 for identification.
In the mixed logit model framework, the random utility term is
made up of two components: a probitlike random component with a
multivariate distribution, and an IID Type I extreme value distributed
random component. The probitlike random component captures the
interdependencies among alternatives, the response heterogeneity,
or both. Walker (11) showed that the mixed logit model with the
factor-analytic structure is a general formulation that can be used
to specify all known (additive) error structures, including hetero-
scedasticity, nested (cross-nested) error structures, random param-
eters, and the autoregressive process. Thus, the heterogeneity and
heteroscedasticity are specified by using a factor-analytic structure.
In a compact vector form, the utility function at the tth choice
occasion of individual n accommodating the heterogeneity and
heteroscedasticity can be written as follows:
Unt = Wnα + Xntβ n + T1 νn +  nt (1)
where
Unt = (Jn × 1) vector of utilities,
Wn = (Jn × K) matrix of sociodemographic and trip characteristic
variables including alternative-specific variables,
α = (K × 1) vector of unknown parameters,
Xnt = (Jn × L) matrix of LOS variables,
βn = (L × 1) vector of unknown parameters,
T1 = (Jn × Jn) matrix of unknown variance parameter,
νn = (Jn × 1) vector of IID random variables with zero mean and
unit variance,
nt = (Jn × 1) vector of IID Type I extreme value random variables
with zero location parameter and scale parameter µt,
Jn = number of alternatives in choice set Cn of individual n,
L = number of LOS variables, and
K = number of sociodemographic and trip characteristic variables,
including alternative-specific variables.
Lee, Chon, and Park 71

The second term of Equation 1 represents the response hetero- The unknown parameters in this model are µt, α, β, γ, and those
geneity. Random-parameter structure can accommodate the observed in T. The explanatory variables Wn and Xn are observed, whereas νn,
heterogeneity as well as the unobserved heterogeneity: υn, and n are unobserved. If the factors νn and υn are known, the
model corresponds to an MNL formulation. The conditional choice
β n = ± exp(β + γ Zn + T2 υ n ) (2) probability of alternative i at the tth choice occasion of individual n,
given νn and υn, is as follows:
where
β = (L × 1) vector of constants in LOS variables; exp[µ t (Wnα + Xnitβ n + T1 νn )]
Lnt (i νn , υ n ) = (5)
γ = (L × K) matrix of unknown parameters;
Zn = (K × 1) vector of sociodemographic and trip characteristic
∑ exp[µ (W α + X
j ∈Cn
t n njt β n + T1 ν n )]

variables for observed heterogeneity;

T2 = (L × L) lower Cholesky matrix, such that T2T′2 = Σβ (variance- The unconditional choice probability of alternative i at the tth
covariance matrix); and choice occasion of individual n is
υn = (L × 1) vector of IID random variables with zero mean and
unit variance. Pnt (i ) = ∫∫L
ν υ
nt (i νn , υn )dF( υ)dF( ν) (6)

The unobserved heterogeneity model was estimated with lognor-

mal distributions for the sign constraints. For example, the travel where F() is the multivariate cumulative normal distribution.
time and cost parameters should have a negative sign. T2 is usually For maximum-likelihood estimation, the probability of each sam-
specified as diagonal except when the LOS variables are closely cor- pled individual’s sequence of observed choices is needed. The prob-
related. If there are LOS variables that are correlated with each other ability of individual n’s observed sequence of choices is the product
such as travel time and cost, T2 is not specified as diagonal and the of the conditional choice probability (Equation 5).
correlation should be estimated.
The third term of the Equation 1 represents the heteroscedasticity: Ln (i νn , υ n ) = ∏L
t
nt (i ν n , υ n ) (7)

σ1 0 0 L 0  The unconditional probability for the sequence of choices is

 
σ2 L 0 
0

0

Pn (i ) = ∫ ∫ L (i ν , υ )dF(υ)dF( ν)
ν υ
n n n (8)
T1 =  0 0 σ3 L 0  (3)
 
M M M O M 
  MODEL ESTIMATION
 0 0 0 L σ Jn 
The maximum simulated likelihood (MSL) estimation method is
where σi is the variance parameter of alternative i. generally used to estimate the mixed logit model. The choice prob-
The heteroscedasticity model was estimated with a normal distri- ability of alternative i is replaced with the unbiased smooth tractable
bution. It is not necessary to constrain the minimum variance term to simulator:
zero for identification because the heteroscedasticity components are D

∑ L (i θ, ν , υ )
1
simulated such that the error component is identical for all responses Pˆn (i θ) = n
d
n
d
n (9)
D d =1
of the same individual.
Its scale parameter (from Equation 1) is specified as follows: where

µ t = (µ SP − µ RP )  δ SP + µ RP (4) L(i  θ, νdn, υdn) = choice probability of alternative i given θ, νdn,

t
where
µRP = scale parameter of RP data (normalized to 1 for identifi-
cation),
µSP = scale parameter of SP data, and
δSP
t = dummy variable taking value 1 if tth choice occasion of
individual n to his or her SP choice and 0 otherwise.
Such a specification accommodates the scale difference between
the RP and SP choice contexts. Specifically, the scale parameter of
the RP data is normalized to 1 for identification, and the scale param-
and υdn;
θ = vector of unknown parameters;
ν dn = dth draw from distribution of ν;
υ dn = dth draw from distribution of υ; and
D = number of draws (repetitions).
This process is repeated D times for the given value of the param-
eter vector to be estimated, and the integrand (Equation 8) is ap-
proximated by averaging the computed choice probabilities in the
different draws. The simulated log-likelihood function can be written
as follows:

∑ ln[ Pˆ (i θ)]
N
eter of the SP data is estimated. If the variance of the random utility
in the SP data is larger than that of the random utility in the RP data, SLL(θ) = n (10)
n =1
the scale parameter of the SP data is estimated between 0 and 1. In
contrast, if the variance of the random utility in the SP data is smaller where N is the total number of individuals in the sample.
than that of the random utility in the RP data, the scale parameter of The parameter vector is estimated as the vector values that max-
the SP data is estimated over 1. imize the simulated log-likelihood function. Under rather weak
72 Transportation Research Record 1898

regularity conditions, the MSL estimator is consistent, asymptotically
efficient, and asymptotically normal-distributed (13).
The MSL estimator will generally be a biased simulation of the
maximum likelihood estimator because of the logarithmic transfor-
mation of the choice probabilities in the log-likelihood function. The
bias of the MSL estimator decreases as the number of repetitions (D)
increase (14). Brownstone and Train (9) showed the bias to be rather
negligible with 250 repetitions. Since the mixed logit model here
used the lognormal distributions, the empirical analysis was carried
out 500 times.
Bhat (15) showed that the Halton simulation method outperforms
the pseudo-random Monte Carlo simulation method for mixed logit
model estimation. Bhat (16 ) also described a problem in which the
standard Halton sequence defined by large primes can be highly
correlated with each other over large portions of the sequence for
simulation of high-dimensional integrals and suggested an effec-
tive solution, the scrambled Halton sequence. The standard Halton
sequence is used here because relatively low-dimensional integrals
are simulated.
To decrease estimation time, the gradients of the simulated log-
likelihood function with respect to the parameter were analytically
programmed and the Hessian (the second derivatives) was approx-
imated with the technique of Berndt et al., which is computed as
follows (14):
 ∂ ln Pn (θ)   ∂ ln Pn (θ)  ′
N
B = ∑ 
n =1  ∂θ   ∂θ 
(11)
The score is evaluated per individual and computed with the simu-
lated scores for the MSL estimation. The estimation and computations
herein were carried out using Microsoft Visual C++ programming
language on a personal computer.
EMPIRICAL ANALYSIS
Data Sources
method (17). Since the data came from the choice-based sample, the
weighted exogenous sample maximum likelihood (WESML) estima-
tor should be used (18). For the WESML the population fraction and
sample fraction are needed. Since HSR is not now in operation in
Korea and there is no population fraction, the WESML could not be
used. The sample used consists of 581 RP and 2,078 SP data records.
The objective of the RP survey was to obtain information on
the current trip such as perceived travel times and costs of available
alternatives. The RP data also include sociodemographic and gen-
eral trip-making characteristics of the traveler (e.g., the purpose of
the trip, travel group size, origin and destination cities, choice set,
children or baggage dummy, income level, number of vehicles in
household, sex, and age). The LOS variables are access and egress
time, access and egress cost, in-vehicle time, and travel cost (fare).
The objective of the SP survey was to obtain additional data to
model the travel behavior responses of the HoNam corridor travel-
ers to changes in HSR in-vehicle time and its cost. It was hypoth-
esized that the other travel conditions were the same as current
travel conditions in the RP survey and that the access time and cost
of the HSR alternative were equal to those of the existing rail alter-
native. The experimental design for the SP survey generated six sce-
narios of the HSR alternative (two levels of fare times three levels
of in-vehicle time):
• HSR fare: equivalent to 65% and 90% of the airfare and
• HSR in-vehicle time: each case of journey speed 150 km/h,
180 km/h, and 210 km/h.
The universal choice set of the RP data consists of four travel
modes: car, bus, existing rail, and air. The HSR alternative is added
to the universal choice set of the SP data including the four foregoing
alternatives. Each traveler has his or her own choice set.
Table 1 presents the availability and choice share of each mode,
and Table 2 presents the descriptive statistics for sociodemographic
and trip characteristics in the joint RP-SP sample.

The data used in the analysis were assembled by the Korean Society MNL Models
of Transportation in 2002 to develop travel demand models to fore-
cast HSR demand in the HoNam corridor (Seoul–IkSan, GwangJu, Table 3 shows the results from the three MNL models: the RP MNL,
MokPo corridor in South Korea) with the choice-based sampling the SP MNL, and the joint RP-SP MNL.

TABLE 1 Availability and Choice Shares of Alternatives

RP Sample SP Sample Joint Sample

Availability Choice Availability Choice Availability Choice

Alternatives Shares Shares Shares Shares Shares Shares

Car 0.809 0.522 0.782 0.351 0.788 0.388

Bus 0.943 0.207 0.934 0.147 0.936 0.160

Rail 0.921 0.194 1.000 0.137 0.983 0.150

HSR 0.000 0.000 1.000 0.315 0.781 0.246

Air 0.341 0.077 0.355 0.050 0.352 0.056

Sample size 581 2,078 2,659

TABLE 2 Sociodemographic and Trip Characteristics in Joint RP-SP Sample

Average Monthly Number of

Household Income Vehicles per
(Unit: million Won) Travel Group Size Purpose of Trip Household Age

Range1 Share Size Share Purpose Share Number Share Range Share

< 1.5 0.146 1 0.479

Business 0.366 0 0.085 20-29 0.342
1.5-2.0 0.190 2 0.243
Visit 0.391 1 0.651 30-39 0.330
2.0-2.6 0.219 3 0.097
Tour 0.093 2 0.221 40-49 0.226
2.6-3.5 0.245 4 0.111
Others 0.151 3+ 0.044 50 < 0.102
3.5 < 0.201 5+ 0.070

1
< 1.5: lower 25%, 1.5-2.0: lower 25-45%, 2.0-2.6: upper 35-55%, 2.6-3.5: upper 15-35%, 3.5 <: upper 15% of the
population

TABLE 3 MNL Model Estimation Results

RP MNL SP MNL Joint RP-SP MNL
Variables Parameter t-statistics Parameter t-statistics Parameter t-statistics
Alternative Specific Constants
RP Sample
Bus 0.7655 1.17 - - - -
Rail 2.0136 3.38 - - 1.9116 6.11
Air -1.1190 -1.46 - - -1.7244 -4.73
SP Sample
Bus - - - - - -
Rail - - 1.6644 6.07 1.7565 6.58
HSR - - -0.4135 -2.39 -0.4534 -5.69
Air - - -1.8166 -5.44 -1.9422 -2.66
Socio-demographic Variables
Vehicles in household
Car 0.6248 3.12 0.1483 1.86 0.1821 2.40
Rail - - -0.4294 -3.56 -0.4884 -4.36
Air 0.4344 1.47 0.2665 1.91 0.2335 7.16
Travel group size
Car 0.6699 4.16 - - - -
Bus -0.4428 -2.41 -0.6341 -7.93 -0.7289 -8.63
Rail - - -0.5493 -6.85 -0.5660 -7.22
Baggage/Children
Bus -0.5610 -1.65 -0.5292 -2.78 -0.5674 -3.21
HSR - - -0.8814 -6.55 -0.9444 -6.06
Air -2.9877 -2.41 -2.3779 -3.83 -2.7688 -4.64
Business trip
Car 1.3275 4.01 - - -
Bus 0.7548 2.30 -0.6089 -4.13 -0.6089 -4.36
Rail - - -1.2183 -6.68 -1.3131 -7.16
Air 2.3451 4.96 1.0147 4.20 1.0458 4.68
Higher income group1
Car - - 0.9536 4.12 0.6042 3.71
Bus - - 0.4694 1.77 - -
HSR - - 1.2281 5.52 0.9568 5.53
Level of Service Variables
Access/egress time
(in 10 mins.) -0.0146 -0.55 -0.0410 -3.20 -0.0369 -3.03
Access/egress cost
(in thousand Won)
Bus and Rail -0.0871 -2.50 -0.0917 -4.67 -0.0949 -5.13
Car, HSR, and Air - - - - - -
In-vehicle time
(in 10 mins.)
Car -0.0919 -4.41 -0.0830 -10.39 -0.0871 -9.01
Bus -0.0420 -1.81 -0.0578 -6.00 -0.0556 -5.55
Rail, HSR, and Air -0.1343 -5.67 -0.1281 -11.56 -0.1349 -9.84
Travel cost (Fare)
(in thousand Won) -0.0246 -2.84 -0.0434 -12.50 -0.0432 -9.89
SP-to-RP Scale factor2 - - - - 0.9541 -0.60
1
Upper 15% income group (Over 3.5 million Won in average monthly household income).
2
The t-statistic corresponding to the scale parameter is computed with respect to 1.
(-): Data not applicable or parameter not statistically significant.
74
The coefficients of the alternative-specific constants show the dif-
ferences between the RP and SP samples due to the differences in
the alternative share and in the choice set between the two samples.
The effects of sociodemographic variables indicate that individuals
in a household with a high number of vehicles are likely to prefer to
travel by car and air. The bus and HSR are less attractive to those
who have baggage or children because of the burden of transferring
at the bus terminal, station, and airport. Although an individual trav-
eling in a group prefers the car alternative, he or she does not prefer
the bus and rail. An individual in the higher-income group (upper
15% of the population) prefers the car and HSR, and those who
travel for business relatively prefer to travel by air.
Among the LOS variables, the results show the expected negative
effects of travel time and cost. However, the parameters of access
and egress cost in the car, HSR, and air are not statistically different
from zero. A comparison of the RP MNL and the other MNL mod-
els shows the difference in the LOS variable effects. The RP MNL
model does not have a statistically significant access-and-egress
time parameter. This result reflects the limited variation in access-
and-egress time within the RP sample as well as multicolinearity
between access-and-egress time and access-and-egress cost. The other
MNL models provide a statistically significant access-and-egress
time parameter.
The joint RP-SP MNL model shows that there is no significant
scale difference in the RP and SP contexts. From the likelihood ratio
test, the hypothesis that there is no scale difference cannot be re-
jected. The likelihood ratio value for the test is 1.58 [= −2(−2615.73
+ 2614.94)], which is smaller than the chi-squared value (= 11.35)
corresponding to the three additional parameters in the unrestricted
model at a 0.01 level of significance.
Mixed Logit Models
Table 4 presents the results of the three mixed logit models for the
joint RP-SP analysis. The first model is the heterogeneity model,
which accommodates observed and unobserved heterogeneity in
response to the LOS attributes; the second is the heteroscedasticity
model, which allows the unequal variances across the alternatives;
and the third is the heterogeneity-and-heteroscedasticity model, which
simultaneously accommodates the two modeling issues.
Table 5 provides the data-fit statistics, and Table 6 presents the
monetary values of time from the various models. The monetary value
of time is very high in the RP MNL model; this model cannot capture
the sensitivity to cost because of the limited variation in cost within
the RP sample as well as the multicolinearity between the travel time
and cost. Since the parameter of travel time is distributed in the
heterogeneity and the heterogeneity-and-heteroscedasticity models,
the mean, median, and mode value are shown. Furthermore, the mon-
etary values of time in the heterogeneity and the heterogeneity-and-
heteroscedasticity models are classified into non-business-trip and
business-trip values. The monetary values of time on a business trip
are almost twice those of a nonbusiness trip.
Heterogeneity Model
A comparison of the business trip in the rail utility between the het-
erogeneity model and the other models reveals that the heterogeneity
model has a different, positive sign. The t-statistics for the constants
Transportation Research Record 1898
of the LOS variables are not reported because the only reasonable test
of the constants would be against a value of negative infinity. All the
standard deviation parameters representing the unobserved hetero-
geneity are not statistically significant. In particular, the travelers’
response to access-and-egress time and travel cost factors varies
across individuals. The parameters representing the observed hetero-
geneity are statistically significant. Business travelers are more sen-
sitive to the LOS factors except the access-and-egress time, and an
individual in a household with a high number of vehicles is more sen-
sitive to the access-and-egress cost and the in-vehicle time of the car.
However, the income level does not affect the observed heterogene-
ity. The reason could be that individuals in the sample tend to avoid
revealing their own income. Also, there is no statistically significant
scale difference between the RP and SP contexts.
From the likelihood ratio test, the homogeneity hypothesis can
be rejected. The likelihood ratio value for the test is 98.12 [= −2
(−2614.94 + 2565.88)], which is larger than the chi-squared value
(= 24.72) corresponding to the 11 additional parameters in the un-
restricted model at a 0.01 level of significance. The unconstrained
heterogeneity model is also estimated, which has all the standard de-
viation parameters representing the unobserved heterogeneity and
correlations between travel time and cost. The likelihood ratio value
for the test is 100.88 [= −2(−2614.94 + 2564.50)], which is larger
than the chi-squared value (= 36.19) corresponding to the 19 addi-
tional parameters in the unrestricted model at a 0.01 level of signif-
icance. These results confirm the need to accommodate observed
and unobserved heterogeneity effects.
Heteroscedasticity Model
The alternative-specific constant for HSR has a different, negative
sign compared with the results for the other models. This negative
sign means that if all the travel conditions are equal across alterna-
tives, the HSR alternative is less attractive than the car alternative.
The SP-to-RP scale factor is larger than 1 but not statistically differ-
ent from 1 in the heteroscedasticity model, whereas it is smaller than
1 in the joint RP-SP MNL model and the heterogeneity model. It is
the same in the heterogeneity-and-heteroscedasticity model. In sum-
mary, this finding means that the variance of the random component
in the SP data is decreased when the heteroscedasticity is considered.
All the Gaussian variance parameters representing the hetero-
scedasticity are statistically significant. Thus, the hypothesis that all
the variances of different alternatives are identical can be rejected.
The variance of the random term in the HSR utility is especially
larger than the others since the HSR alternative is a nonexistent travel
alternative. From the likelihood ratio test, the homoscedasticity
hypothesis can be rejected. The likelihood ratio value for the test is
72.80 [= −2(−2614.94 + 2578.54)], which is larger than the chi-squared
value (= 18.47) corresponding to the seven additional parameters in the
unrestricted model at a 0.01 level of significance. This result confirms
the need to accommodate the heteroscedasticity effect.
Heterogeneity-and-Heteroscedasticity Model
The parameters of a business trip by bus, rail, and air are not statisti-
cally different from zero. The effects of the LOS attributes and the
sociodemographic variables are generally larger than those of the het-
erogeneity model. The SP-to-RP scale factor in the heterogeneity-
and-heteroscedasticity model is larger than in the others. However, it
is not statistically different from 1.
Lee, Chon, and Park 75

TABLE 4 Mixed Logit Model Estimation Results

Hetero- Heterogeneity &
Heterogeneity
scedasticity Heteroscedasticity
Variables Parm. t-stat. Parm. t-stat. Parm. t-stat.
Alternative Specific Constants - RP Sample
Bus 0.4671 0.91 -0.0773 -0.11 3.7916 1.48
Rail 2.2006 4.28 2.6962 2.21 7.3608 1.75
Air -1.0511 -2.07 -3.7831 -2.59 -1.6656 -1.06
Alternative Specific Constants - SP Sample
Bus 0.5232 1.09 0.8224 1.20 4.7331 1.70
Rail 2.1171 4.81 3.2463 2.76 7.8103 1.87
HSR 0.3091 0.88 -1.6260 -2.20 0.3266 0.31
Air -1.1702 -2.41 -3.5970 -2.38 -1.0867 -0.73
Socio-demographic Variables
Vehicles in household - Car 0.6252 2.75 0.5108 1.81 2.8047 1.73
Rail -0.4792 -3.77 -0.6770 -2.37 -0.9332 -1.68
Air 0.3605 1.99 0.2720 0.89 1.0770 1.47
Travel group size - Bus -0.7208 -6.89 -1.3605 -2.93 -2.1263 -1.85
Rail -0.5779 -7.08 -1.2176 -2.90 -2.0669 -1.87
Baggage/Children - Bus -0.6422 -3.09 -0.8881 -2.34 -1.2242 -1.66
HSR -0.9556 -5.48 -2.1629 -2.78 -3.0890 -1.79
Air -3.0874 -3.70 -5.9057 -2.58 -9.7686 -1.71
Business trip - Bus 0.4626 0.93 -1.1752 -2.52 -1.0268 -0.83
Rail 0.6810 1.68 -2.4055 -2.92 -0.1320 -0.12
Air 0.3300 1.05 1.7946 2.20 -0.3499 -0.38
Higher income group1 - Car 0.8407 3.81 1.0071 2.00 2.2826 1.68
HSR 1.1625 5.40 2.1810 2.74 3.9637 1.80
Level of Service Variables
Access/egress time (in min)
Constant -6.3545 - -5.1032 - -5.9783 -
Standard Deviation 2.2458 2.92 - - 1.9388 3.22
Access/egress cost of Bus and Rail (in Won)
Constant -10.7528 - -8.7462 - -9.6350 -
Business trip 2.5230 3.13 - - 1.9572 4.03
Vehicles in household 0.2297 1.53 - - 0.4688 3.12
Standard Deviation - - - - - -
In-vehicle time of Car (in min)
n)
Constant -4.9510 - -3.9183 - -4.0638 -
Business trip 0.4682 4.37 - - 0.4630 4.03
Vehicles in household 0.1540 2.00 - - 0.2486 4.35
Standard Deviation - - - - - -
In-vehicle time of Bus (in min)
Constant -5.2029 - -4.2056 - -3.8894 -
Business trip 0.6843 2.18 - - 0.2648 1.13
Standard Deviation - - - - - -
In-vehicle time of Rail, HSR, and Air (in min)
Constant -4.3895 - -3.6382 - -3.3735 -
Business trip 0.6171 4.35 - - 0.4568 3.39
Standard Deviation - - - - - -
Travel cost (Fare) (in Won)
Constant -10.1686 - -9.2015 - -9.2939 -
Business trip 0.2103 3.07 - - 0.3508 5.89
Standard Deviation 0.4877 2.32 - - 0.2859 2.72
Gaussian Variance Variables - Car - - 3.7409 2.86 5.5782 1.85
Bus - - 1.0895 1.72 1.6347 1.53
Rail - - 1.7837 2.41 2.8994 1.79
HSR - - 3.7464 2.93 6.6255 1.86
Air - - 2.8004 2.52 2.9430 1.76
SP-to-RP Scale factor2 0.9636 -0.35 2.1174 0.88 2.4887 0.62
1
Upper 15% income group (Over 3.5 million Won in average monthly household income).
2
The t-statistic corresponding to the scale parameter is computed with respect to 1.
(-): Data not applicable or parameter not statistically significant.

There is an improvement in data-fit statistics when one intro-
duces heterogeneity and heteroscedasticity. The rho-bar-squared
value increases from 0.248 to 0.269. From the likelihood ratio
tests, the homoscedasticity hypothesis in the heterogeneity condi-
tion and the homogeneity hypothesis in the heteroscedasticity con-
dition can be rejected at a 0.01 level of significance. These results
show the need to accommodate heterogeneity and heteroscedasticity
simultaneously.
−2( −2565.88 + 2526.83) = 78.10 > χ 5, 0.01 = 15.08
−2( −2578.54 + 2526.83) = 103.42 > χ 9, 0.01 = 21.66
76 Transportation Research Record 1898

TABLE 5 Data-Fit Statistics

Hetero-
geneity &
Joint RP-SP Hetero- Hetero- Hetero-
RP-MNL SP-MNL MNL geneity scedasticity scedasticity
Log-likelihood
-625.40 -2887.64 -3513.04 -3513.04 -3513.04 -3513.04
at zero

Log-likelihood
-404.52 -2206.23 -2614.94 -2565.88 -2578.54 -2526.83
at convergence

Number of
18 23 25 36 32 41
Parameters

Rho-squared 0.3532 0.2360 0.2556 0.2696 0.2660 0.2807

Rho-bar-squared 0.3244 0.2280 0.2485 0.2594 0.2569 0.2691

TABLE 6 Monetary Values of Time

Monetary Value of Time1 Car Bus Rail, HSR, and Air

22,200 10,200 32,500

RP-MNL
($ 18.6) ($ 8.5) ($ 27.1)
11,200 7,900 17,200
SP-MNL
($ 9.3) ($ 6.6) ($ 14.3)
12,100 7,700 18,700
Joint RP-SP MNL
($ 10.1) ($ 6.4) ($ 15.6)
9,800 7,600 17,200
Mean
($ 8.2) ($ 6.4) ($ 14.3)
Non-
11,000 8,600 19,400
business Median
($ 9.2) ($ 7.2) ($ 16.2)
Trip
14,000 10,900 24,600
Mode
($ 11.7) ($ 9.1) ($ 20.5)
Heterogeneity
15,700 15,400 31,900
Mean
($ 13.1) ($ 14.7) ($ 26.6)
Business 17,700 17,000 36,000
Median
Trip ($ 14.7) ($ 14.2) ($ 30.0)
22,400 21,600 45,600
Mode
($ 18.7) ($ 18.0) ($ 38.0)
11,800 8,900 15,600
Heteroscedasticity
($ 9.9) ($ 7.4) ($ 13.0)
10,800 12,800 21,500
Mean
($ 9.0) ($ 10.7) ($ 17.9)
Non-
11,200 13,300 22,400
business Median
($ 9.3) ($ 11.1) ($ 18.6)
Trip
12,200 14,500 24,300
Mode
Heterogeneity and ($ 10.1) ($ 12.1) ($ 20.2)
Heteroscedasticity 17,100 16,700 33,900
Mean
($ 14.3) ($ 13.9) ($ 28.2)
Business 17,800 17,400 35,300
Median
Trip ($ 14.8) ($ 14.5) ($ 29.4)
19,300 18,900 38,300
Mode
($ 16.1) ($ 15.7) ($ 31.9)
1
Unit: Won/hr (U.S. $1.0 is about 1,200 Won).
Lee, Chon, and Park 77

Policy Implications CONCLUSIONS

The objective of the original survey was to examine the effects of
the newly constructing HSR mode in the HoNam corridor of Korea.
Consequently, the focus here is on an examination of the aggregate-
level direct and cross-elasticities of the changes in the LOS attri-
butes of the HSR alternative. The aggregate elasticities provide the
proportional changes in the expected market shares of each mode in
response to a uniform percentage change in the LOS attribute of the
HSR alternative.
Table 7 presents the aggregate direct and cross-elasticities of
the four models for the joint RP-SP analysis in the Seoul–GwangJu
corridor. The simulation for aggregate forecasting was carried out
1,000 times. The HSR direct elasticities indicate that a reduction in
the fare is a more effective means of increasing the HSR market
share than a reduction in the in-vehicle travel time.
Among the four models, the heterogeneity model shows higher
direct elasticities. The results from the heteroscedasticity model and
the heterogeneity-and-heteroscedasticity model are relatively close to
each other. The cross-elasticities of the four models are different from
each other. The joint RP-SP MNL model produces unrealistic cross-
elasticities that are identical across alternatives. The heteroscedasticity
model shows that the cross-elasticities of rail are larger than those of
the other travel modes and the cross-elasticities of car and air are sim-
ilar to each other. The heterogeneity-and-heteroscedasticity model
shows relatively much lower cross-elasticities except those for the bus
alternative.
Although the heterogeneity model predicts a higher percentage
decrease in the air choice probabilities in response to the reduction of
HSR in-vehicle travel time, the heterogeneity-and-heteroscedasticity
model predicts a relatively lower percentage decrease in the car and
air choice probabilities. The same model predicts a higher percent-
age decrease in the bus choice probabilities in response to the reduc-
tion of HSR fare than do the other models. Findings indicate that the
heterogeneity model leads to an overestimation in the choice prob-
ability of the bus alternative and an underestimation in the choice
probability of the air alternative because it ignores heteroscedasticity.
A mixed logit framework for joint RP-SP analysis is formulated that
accommodates the following behavioral considerations: (a) observed
and unobserved heterogeneity across individuals in response to LOS
attributes, (b) heteroscedasticity across alternatives, and (c) scale dif-
ferences between the RP and SP choice contexts. These behavioral
issues are considered by using factor-analytic structures.
The mixed logit formulation here is estimated using the MSL esti-
mation method, which employs quasi-random Halton draws. This
formulation is applied to examine the travel behavior responses of
HSR users in the HoNam corridor to changes in travel conditions.
Several meaningful results can be derived from the empirical analy-
sis. First, the results confirm the advantage of joint RP-SP analysis.
The parameter of access-and-egress time is not statistically significant
in the RP MNL model; joint RP-SP analysis is better able to represent
the trade-offs in LOS attributes. Second, the results support the need
to accommodate heterogeneity across individuals and heteroscedas-
ticity across alternatives. The heterogeneity-and-heteroscedasticity
model shows significant random variations and differences in sensi-
tivity to the LOS variables on the basis of the trip purpose and vehicle
ownership. This model also shows significant differences in the vari-
ances of random components of utilities across alternatives. This gen-
eral model rejects the other restrictive models from the likelihood ratio
tests. Thus, the homogeneous response and homoscedasticity assump-
tion of the MNL model can be rejected. Third, accounting for the het-
erogeneity without the heteroscedasticity leads to an overestimation
of direct elasticities. Fourth, there is an improvement in data-fit sta-
tistics when one introduces heterogeneity and heteroscedasticity. The
rho-bar-squared value increases from 0.248 to 0.269. Finally, the vari-
ance of the random component in the SP data is decreased when het-
eroscedasticity is considered, and there is no statistically significant
scale difference between the RP and SP contexts. All the SP-to-RP
scale factors in the models are not statistically different from 1.
The policy implications for the market shares of the various travel
modes are different among the models. The differences between the
general model and the restrictive models are noticeable in the case of
prediction of the market share of the HSR alternative. These results

TABLE 7 Aggregate Direct and Cross-Elasticities in Response to Changes in LOS Variables for HSR

Heterogeneity &
Joint RP-SP MNL Heterogeneity Heteroscedasticity
Heteroscedasticity

HSR 0.7047 0.9692 0.4074 0.3817

Decrease in Car -0.4110 -0.4368 -0.2780

In-vehicle
Bus -0.5955 -0.5496 -0.5742
Time of the
-0.6461
HSR Rail -0.5193 -0.6114 -0.4314

Air -0.8160 -0.4428 -0.5465

HSR 0.7068 1.0705 0.5313 0.4355

Car -0.3650 -0.5706 -0.3147

Decrease in
Fare of the Bus -0.7764 -0.7150 -1.0775
HSR -0.7042
Rail -0.6562 -0.7924 -0.5623

Air -0.6244 -0.5778 -0.5531

78
highlight the need to accommodate heterogeneity and heteroscedas-
ticity within the context of intercity travel mode choice modeling that
assists policy decision making.
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