This paper proposes a microeconomic model for activity time allocation analysis that recognizes the random nature of daily time allocation, while also focusing on activities as a direct source of individual utility. More specifically, different levels of satisfaction (or utility) are gained from activity participation depending on the amount of time allocated to and the type of goods utilized in daily activities. The proposed model represents individual utility as a function of activity participation, accounts for the budget constraint in activity time allocation, allows for the interindividual and interactivity variation of utility, and considers the entire sphere of discretionary activities (in-home as well as out-of-home activities and trips). The aim of this study is to show how including a budget constraint in random utility models avoids overestimating the times allocated to activities and trips estimated by earlier random utility-based models that consider only time constraints. In particular, estimates of in-home and out-of-home discretionary activity and trip times for a sample of Italian single individuals from the 2003 National Institute of Statistics (ISTAT) Time Use Survey are presented. Compared with the estimates obtained using the simply time-constrained model with no budget constraint, the empirical findings show the variable effects to be interpreted in the same way. A greater number of significant variables in the double-constrained model denote greater complexity of the phenomenon to be represented. Incorporating the budget constraint diminishes the effect of some variables on activity time allocation.
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