The use of discrete choice models in the determination of community choices in public issue areas impacting on business decision making

Abstract

Responsible business are increasingly recognizing the need to be sensitive to the local environmental implications of decisions taken in the course of establishing and operating a business. Rather than rely on the pressures of lobby groups to direct business behavior in relation to community concerns, a preferred strategy is to identify the preferences and choices of the community as a whole and to use information from a representative cross-section from the community to aid in making environmentally linked decisions that maximize the benefits to the affected community. This study demonstrates how discrete-choice models can be used to identify community choices between alternative traffic management schemes designed to improve the traffic impacts of business decisions such as the location of factories, offices, and retail outlets. We also indicate the loss of orthogonality, which is unavoidable when discrete-choice models are estimated on disaggregate data as distinct from grouped data.