This paper introduces a behavioral framework to model residential relocation decision in island areas, at which the decision in question is influenced by the characteristics of island regions, policy variables related to accessibility measures and housing prices at the proposed island area, as well as personal, household, job and latent characteristics of the decision makers.

The model framework corresponds to an Integrated Choice and Latent Variable (ICLV) setting where: the discrete choice model includes latent variables that capture attitudes and perceptions of the decision makers. The latent variable model is composed of a group of structural equations describing the latent variables as a function of observable exogenous variables, and a group of measurement equations, linking the latent variables to observable indicators.

An empirical study has been developed for the Greek Aegean island area. Data were collected from 900 households in Greece contacted via telephone. The households were presented hypothetical scenarios involving policy variables, where 2010 was the reference year. ICLV Binary Logit (BL) and Mixed Binary Logit (MBL) relocation choice models were estimated sequentially. Findings suggest that MBL models are superior to BL models, while both the policy and the latent variables significantly affect the relocation decision and improve considerably the models’ goodness of fit. Sample enumeration method is finally used to aggregate the results over the Greek population.

Keywords: residential relocation decision, island areas, ICLV models, sequential estimation