Tracing the Impact of Macro-economic Indicators in Micro-level Households’ Preferences

This study investigates whether macro-level economic indicators have an impact on the micro-level households’ preferences towards their budget allocation. The hypothesis of this study is that major changes in the macro-economy conditions can cause variations in the way households allocate their budget to different activities (expenditure categories). Typically, households’ tastes are assumed to be unchanged. Under this assumption, changes in the economy can only be reflected in the model input (changes in the explanatory variables). However, this study hypothesizes that in addition to this impact, changes in the economy may change households’ behaviors as well. To investigate this hypothesis, five separate multiple discrete-continuous extreme value models for household expenditure on different commodities are developed using the data of more than 6000 households from 2006 to 2010. The parameters of the models in 2006, 2007, 2009 and 2010 are then statistically tested against the parameters of the model in 2008. This is because the oil market experienced a significant disruption in 2008, where the oil price dropped from $130 to $40 per barrel in six months. According to the results, the estimated coefficients for most of the variables are statistically different in 2008 which suggests that the macro-economic conditions have a significant impact on how people prefer to allocate their budget to different activities.

• Supplemental Notes:
  • This paper was sponsored by TRB committee ADB40 Standing Committee on Transportation Demand Forecasting.
• Corporate Authors:

  Transportation Research Board

  ,    
• Authors:
  • Ghasri, Milad
  • Rashidia, Taha H
  • Roseb, John M
• Conference:
  • Transportation Research Board 98th Annual Meeting
  • Location: Washington DC, United States
  • Date: 2019-1-13 to 2019-1-17
• Date: 2019

Language

• English

Media Info

• Media Type: Digital/other
• Features: References;
• Pagination: 6p

Subject/Index Terms

• TRT Terms: Budgeting; Commodities; Consumer preferences; Expenditures; Households; Impacts; Macroeconomics; Statistical analysis
• Subject Areas: Economics; Planning and Forecasting; Transportation (General);

Filing Info

• Accession Number: 01697422
• Record Type: Publication
• Report/Paper Numbers: 19-02364
• Files: TRIS, TRB, ATRI
• Created Date: Mar 1 2019 3:50PM