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Side constrained optimisation to capture capacity of choices in the multinomial logit model: case study of income tax policy in the USA prior to the 2009 economic crisis

Bagloee, Saeed Asadi; Withers, Glenn

Description

The choices' limited capacities of the discrete choice models must be taken into account. We propose a convex optimisation formulation in which the exponential formulation of the logit model is upheld in the Karush-Kuhn-Tucker (KKT) conditions. The capacities of the choices are then added to the formulation as side constraints. A solution algorithm based on the successive coordinate descent is proposed. For numerical evaluation, we investigate US income tax policies for the years prior to the...[Show more]

dc.contributor.authorBagloee, Saeed Asadi
dc.contributor.authorWithers, Glenn
dc.date.accessioned2020-05-07T01:33:47Z
dc.identifier.issn1745-7645
dc.identifier.urihttp://hdl.handle.net/1885/203849
dc.description.abstractThe choices' limited capacities of the discrete choice models must be taken into account. We propose a convex optimisation formulation in which the exponential formulation of the logit model is upheld in the Karush-Kuhn-Tucker (KKT) conditions. The capacities of the choices are then added to the formulation as side constraints. A solution algorithm based on the successive coordinate descent is proposed. For numerical evaluation, we investigate US income tax policies for the years prior to the 2009 crisis using multinomial logit models. The tendency of the states for choice of income tax versus other tax sources is assessed and it is found that: 1) all states show a propensity to levy more income tax; 2) this propensity has a ceiling cap similar to what is already known from the 'Laffer curve'; 3) residents in the states with already high income tax are more likely to be subjected to even heavier income tax within caps.
dc.format.mimetypeapplication/pdf
dc.language.isoen_AU
dc.publisherInderscience Publishers
dc.rights© 2019 Inderscience Enterprises Ltd.
dc.sourceInternational Journal of Operational Research
dc.titleSide constrained optimisation to capture capacity of choices in the multinomial logit model: case study of income tax policy in the USA prior to the 2009 economic crisis
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolume36
dc.date.issued2019
local.identifier.absfor140205 - Environment and Resource Economics
local.identifier.ariespublicationu6048437xPUB794
local.publisher.urlhttp://www.inderscience.com/
local.type.statusPublished Version
local.contributor.affiliationBagloee, Saeed Asadi, University of Melbourne
local.contributor.affiliationWithers, Glenn, College of Business and Economics, ANU
local.description.embargo2037-12-31
local.bibliographicCitation.issue1
local.bibliographicCitation.startpage123
local.bibliographicCitation.lastpage149
local.identifier.doi10.1504/IJOR.2019.102073
dc.date.updated2019-11-25T08:05:31Z
CollectionsANU Research Publications

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