To consider or not to consider?: An endogenous choice set formation approach to model the home office frequency decision

Our study proposes an endogenous choice set formation (ECSF) approach to model the decision of home office frequency. We hypothesize that a significant portion of the frequency variation can be explained by an individual’s home office feasibility, which accounts for two components: (1) the perceived suitability of the characteristics of the job and employment condition (employment feasibility), and (2) the individual’s own perception of their suitability for working from home (personal suitability). Both dimensions are modeled as latent variables and found to explain part of the frequency decision. The employment feasibility is the dominant discriminator between the alternatives of 0-1 home office days and 2-3 days, while the personal feasibility becomes more important in explaining the choice of 4-5 home office days. Upon examining the corresponding factor loadings, it appears that the home office work station is a decisive factor in influencing the feasibility of working from home, followed by the quality of the residential environment and the perceived personal suitability for home office work. All three factors exhibit substantial loadings on the latent factor, indicating their meaningful contribution to determining the feasibility of home office work. Additionally, the technological savviness of an individual, although less influential, still has a discernible impact on the feasibility of working from home. The factor loadings of the employment feasibility are relatively less substantial and, except for the job’s degree of digitization, are not statistically significant.