Modelling inertia and shock effects with panel data: An application to mode choice in Santiago

The mode choice process, especially in the case of commuter trips, reflects the strong tendency people have to simplify the assessment of their options when confronted with successive well-known decisions. Thus, repeating a “habitual” choice involving a potentially important inertia element over time is expected. However, while inertia effects increase the probability of maintaining the same choice in a stable situation, in a changing environment disrupted by a radical or significant policy intervention, user behaviour may be affected by a specific response to abrupt changes. Shock effects of this kind could increase the probability of individuals leaving their habitual choices.

The handling of such temporal effects has not received enough attention in practical studies, as most demand models rely on cross-sectional data. A few studies have attempted to incorporate inertia effects, but none include both inertia and shock effects. Here, we use data from the Santiago Panel, a well-known mode choice revealed preference panel built around the introduction of a radical new policy for the conurbation of Santiago de Chile. We aimed to incorporate the effects of three forces involved in the choice process: (1) the relative values of the modal attributes, (2) the inertia effect, and (3) the shock resulting from an abrupt policy intervention. We present the formulation of an inertia-shock model and its application to simulated and actual data (validating the models against new data not used during model estimation). Our results confirm the need to adequately consider such temporal effects when modelling changing systems. Otherwise, severe errors in model estimation may arise.