Modelling the Choice of Residential Location

The problem of translating the theory of economic choice behavior into concrete models suitable for analyzing housing location is discussed. The analysis is based on the premise that the classical, economically rational consumer will choose a residential location by weighing the attributes of each available alternative and by selecting the alternative that maximizes utility. The assumption of independence in the commonly used multinomial logit model of choice is relaxed to permit a structure of perceived similarities among alternatives. In this analysis, choice is described by a multinomial logit model for aggregates of similar alternatives. Also discussed are methods for controlling the size of data collection and estimation tasks by sampling alternatives from the full set of alternatives. /Author/