IDEAS home Printed from https://ideas.repec.org/a/eee/ecotra/v1y2012i1p2-14.html
   My bibliography  Save this article

Valuation of travel time

Author

Listed:
  • Small, Kenneth A.

Abstract

After decades of study, the value of travel time remains incompletely understood and ripe for further theoretical and empirical investigation. Research has revealed many regularities and connections between willingness to pay for time savings and other economic factors including time of day choice, aversion to unreliability, labor supply, taxation, activity scheduling, intra-household time allocation, and out-of-office productivity. Some of these connections have been addressed through sophisticated modeling, revealing a plethora of reasons for heterogeneity in value of time rooted in behavior at a micro scale. This paper reviews what we know and what we need to know. A recurrent theme is that the value of time for a particular travel movement depends strongly on very specific factors, and that understanding how these factors work will provide new insights into travel behavior and into more general economic choices.

Suggested Citation

  • Small, Kenneth A., 2012. "Valuation of travel time," Economics of Transportation, Elsevier, vol. 1(1), pages 2-14.
    • Handle: RePEc:eee:ecotra:v:1:y:2012:i:1:p:2-14
    DOI: 10.1016/j.ecotra.2012.09.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2212012212000093
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecotra.2012.09.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), 2011. "A Handbook of Transport Economics," Books, Edward Elgar Publishing, number 12679.
    2. Henderson, J. Vernon, 1981. "The economics of staggered work hours," Journal of Urban Economics, Elsevier, vol. 9(3), pages 349-364, May.
    3. Börjesson, Maria & Fosgerau, Mogens & Algers, Staffan, 2012. "On the income elasticity of the value of travel time," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 368-377.
    4. Hensher, David A., 2010. "Hypothetical bias, choice experiments and willingness to pay," Transportation Research Part B: Methodological, Elsevier, vol. 44(6), pages 735-752, July.
    5. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-1177, September.
    6. Mokhtarian, Patricia L. & Salomon, Ilan, 2001. "How derived is the demand for travel? Some conceptual and measurement considerations," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(8), pages 695-719, September.
    7. Gunn, Hugh, 0. "Spatial and temporal transferability of relationships between travel demand, trip cost and travel time," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 37(2-3), pages 163-189, April.
    8. Brownstone, David & Small, Kenneth A., 2005. "Valuing time and reliability: assessing the evidence from road pricing demonstrations," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(4), pages 279-293, May.
    9. Shires, J.D. & de Jong, G.C., 2009. "An international meta-analysis of values of travel time savings," Evaluation and Program Planning, Elsevier, vol. 32(4), pages 315-325, November.
    10. Mogens Fosgerau & Kenneth Small, 2017. "Endogenous Scheduling Preferences And Congestion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(2), pages 585-615, May.
    11. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
    12. Fosgerau, Mogens & Bierlaire, Michel, 2007. "A practical test for the choice of mixing distribution in discrete choice models," Transportation Research Part B: Methodological, Elsevier, vol. 41(7), pages 784-794, August.
    13. Louis Anthony Cox Jr. & Weihsueh A. Chiu & David M. Hassenzahl & Daniel M. Kammen, 2000. "Response," Risk Analysis, John Wiley & Sons, vol. 20(3), pages 295-296, June.
    14. Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1039-1061.
    15. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Time and Goods over the Life Cycle," NBER Books, National Bureau of Economic Research, Inc, number ghez75-1, March.
    16. Jos Van Ommeren & Gerard J. Van Den Berg & Cees Gorter, 2000. "Estimating the Marginal Willingness to Pay for Commuting," Journal of Regional Science, Wiley Blackwell, vol. 40(3), pages 541-563, August.
    17. Fosgerau, Mogens & Engelson, Leonid, 2011. "The value of travel time variance," Transportation Research Part B: Methodological, Elsevier, vol. 45(1), pages 1-8, January.
    18. Ramey, Valerie A., 2009. "Time Spent in Home Production in the Twentieth-Century United States: New Estimates from Old Data," The Journal of Economic History, Cambridge University Press, vol. 69(1), pages 1-47, March.
    19. Fortin, Bernard & Lacroix, Guy, 1997. "A Test of the Unitary and Collective Models of Household Labour Supply," Economic Journal, Royal Economic Society, vol. 107(443), pages 933-955, July.
    20. Li, Zheng & Hensher, David A. & Rose, John M., 2010. "Willingness to pay for travel time reliability in passenger transport: A review and some new empirical evidence," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(3), pages 384-403, May.
    21. Tseng, Yin-Yen & Verhoef, Erik T., 2008. "Value of time by time of day: A stated-preference study," Transportation Research Part B: Methodological, Elsevier, vol. 42(7-8), pages 607-618, August.
    22. Stefanie Peer & Erik Verhoef & Jasper Knockaert & Paul Koster & Yin-Yen Tseng, 2011. "Long-Run vs. Short-Run Perspectives on Consumer Scheduling: Evidence from a Revealed-Preference Experiment among Peak-Hour Road Commuters," Tinbergen Institute Discussion Papers 11-181/3, Tinbergen Institute, revised 25 Aug 2014.
    23. André de Palma & Robin Lindsey & Emile Quinet & Robert Vickerman, 2011. "Handbook Of Transport Economics," PSE-Ecole d'économie de Paris (Postprint) halshs-00754912, HAL.
    24. Gilbert Ghez & Gary S. Becker, 1975. "A Theory of the Allocation of Time and Goods Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 1-45, National Bureau of Economic Research, Inc.
    25. Guotao Hu & Aruna Sivakumar & John Polak, 2012. "Modelling travellers’ risky choice in a revealed preference context: a comparison of EUT and non-EUT approaches," Transportation, Springer, vol. 39(4), pages 825-841, July.
    26. Golob, Thomas F., 2001. "Joint models of attitudes and behavior in evaluation of the San Diego I-15 congestion pricing project," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(6), pages 495-514, July.
    27. Noland, Robert B. & Small, Kenneth A. & Koskenoja, Pia Maria & Chu, Xuehao, 1998. "Simulating travel reliability," Regional Science and Urban Economics, Elsevier, vol. 28(5), pages 535-564, September.
    28. Ory, David T. & Mokhtarian, Patricia L., 2005. "When is getting there half the fun? Modeling the liking for travel," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(2-3), pages 97-123.
    29. Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2012. "Salience in Experimental Tests of the Endowment Effect," American Economic Review, American Economic Association, vol. 102(3), pages 47-52, May.
    30. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1993. "A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand," American Economic Review, American Economic Association, vol. 83(1), pages 161-179, March.
    31. De Borger, Bruno & Fosgerau, Mogens, 2008. "The trade-off between money and travel time: A test of the theory of reference-dependent preferences," Journal of Urban Economics, Elsevier, vol. 64(1), pages 101-115, July.
    32. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
    33. Daly, Andrew & Hess, Stephane & de Jong, Gerard, 2012. "Calculating errors for measures derived from choice modelling estimates," Transportation Research Part B: Methodological, Elsevier, vol. 46(2), pages 333-341.
    34. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
    35. Van Ommeren, Jos & Fosgerau, Mogens, 2009. "Workers' marginal costs of commuting," Journal of Urban Economics, Elsevier, vol. 65(1), pages 38-47, January.
    36. David A. Hensher, 2011. "Valuation of Travel Time Savings," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 7, Edward Elgar Publishing.
    37. Emmerink, Richard H. M. & Verhoef, Erik T. & Nijkamp, Peter & Rietveld, Piet, 1998. "Information policy in road transport with elastic demand: Some welfare economic considerations," European Economic Review, Elsevier, vol. 42(1), pages 71-95, January.
    38. David A. Hensher & William H. Greene, 2011. "Valuation of Travel Time Savings in WTP and Preference Space in the Presence of Taste and Scale Heterogeneity," Journal of Transport Economics and Policy, University of Bath, vol. 45(3), pages 505-525, September.
    39. Gordon F. Newell, 1987. "The Morning Commute for Nonidentical Travelers," Transportation Science, INFORMS, vol. 21(2), pages 74-88, May.
    40. Davidson, William & Donnelly, Robert & Vovsha, Peter & Freedman, Joel & Ruegg, Steve & Hicks, Jim & Castiglione, Joe & Picado, Rosella, 2007. "Synthesis of first practices and operational research approaches in activity-based travel demand modeling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(5), pages 464-488, June.
    41. Kenneth Button & Erik Verhoef (ed.), 1998. "Road Pricing, Traffic Congestion and the Environment," Books, Edward Elgar Publishing, number 940.
    42. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1990. "Economics of a bottleneck," Journal of Urban Economics, Elsevier, vol. 27(1), pages 111-130, January.
    43. Fosgerau, Mogens & Karlström, Anders, 2010. "The value of reliability," Transportation Research Part B: Methodological, Elsevier, vol. 44(1), pages 38-49, January.
    44. Fosgerau, Mogens, 2006. "Investigating the distribution of the value of travel time savings," Transportation Research Part B: Methodological, Elsevier, vol. 40(8), pages 688-707, September.
    45. Greene, William H. & Hensher, David A., 2003. "A latent class model for discrete choice analysis: contrasts with mixed logit," Transportation Research Part B: Methodological, Elsevier, vol. 37(8), pages 681-698, September.
    46. Abrantes, Pedro A.L. & Wardman, Mark R., 2011. "Meta-analysis of UK values of travel time: An update," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(1), pages 1-17, January.
    47. Joan L. Walker & Moshe Ben-Akiva, 2011. "Advances in Discrete Choice: Mixture Models," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 8, Edward Elgar Publishing.
    48. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, vol. 73(4), pages 1367-1382, July.
    49. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-1348, December.
    50. David A. Hensher & John M. Rose & Ian Black, 2008. "Interactive Agency Choice in Automobile Purchase Decisions: The Role of Negotiation in Determining Equilibrium Choice Outcomes," Journal of Transport Economics and Policy, University of Bath, vol. 42(2), pages 269-296, May.
    51. Cirillo, C. & Axhausen, K.W., 2006. "Evidence on the distribution of values of travel time savings from a six-week diary," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(5), pages 444-457, June.
    52. Hess, Stephane & Rose, John M. & Hensher, David A., 2008. "Asymmetric preference formation in willingness to pay estimates in discrete choice models," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 44(5), pages 847-863, September.
    53. Isacsson, Gunnar, 2007. "The trade off between time and money: Is there a difference between real and hypothetical choices?," Working Papers 2007:3, Swedish National Road & Transport Research Institute (VTI).
    54. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-260, May.
    55. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-479, June.
    56. Wardman, Mark, 2004. "Public transport values of time," Transport Policy, Elsevier, vol. 11(4), pages 363-377, October.
    57. Armstrong, Paula & Garrido, Rodrigo & Ortúzar, Juan de Dios, 0. "Confidence intervals to bound the value of time," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 37(2-3), pages 143-161, April.
    58. Joseph G. Altonji & Christina H. Paxson, 1992. "Labor Supply, Hours Constraints, and Job Mobility," Journal of Human Resources, University of Wisconsin Press, vol. 27(2), pages 256-278.
    59. DeSerpa, A C, 1971. "A Theory of the Economics of Time," Economic Journal, Royal Economic Society, vol. 81(324), pages 828-846, December.
    60. Hess, Stephane & Bierlaire, Michel & Polak, John W., 2005. "Estimation of value of travel-time savings using mixed logit models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(2-3), pages 221-236.
    61. Hjorth, Katrine & Fosgerau, Mogens, 2012. "Using prospect theory to investigate the low marginal value of travel time for small time changes," Transportation Research Part B: Methodological, Elsevier, vol. 46(8), pages 917-932.
    62. Jara-Díaz, Sergio R. & Munizaga, Marcela A. & Greeven, Paulina & Guerra, Reinaldo & Axhausen, Kay, 2008. "Estimating the value of leisure from a time allocation model," Transportation Research Part B: Methodological, Elsevier, vol. 42(10), pages 946-957, December.
    63. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Goods Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 46-82, National Bureau of Economic Research, Inc.
    64. Robert B. Noland & John W. Polak, 2002. "Travel time variability: A review of theoretical and empirical issues," Transport Reviews, Taylor & Francis Journals, vol. 22(1), pages 39-54, January.
    65. Mackie, P.J. & Jara-Díaz, S. & Fowkes, A.S., 0. "The value of travel time savings in evaluation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 37(2-3), pages 91-106, April.
    66. André de Palma & Mogens Fosgerau, 2011. "Dynamic Traffic Modeling," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 9, Edward Elgar Publishing.
    67. Yang, Hai, 1998. "Multiple equilibrium behaviors and advanced traveler information systems with endogenous market penetration," Transportation Research Part B: Methodological, Elsevier, vol. 32(3), pages 205-218, April.
    68. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Time Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 83-132, National Bureau of Economic Research, Inc.
    69. Fujii, Satoshi & Gärling, Tommy, 2003. "Application of attitude theory for improved predictive accuracy of stated preference methods in travel demand analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(4), pages 389-402, May.
    70. Abdul Rawoof Pinjari & Chandra R. Bhat, 2011. "Activity-based Travel Demand Analysis," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 10, Edward Elgar Publishing.
    71. Wilson, Paul W., 1988. "Wage variation resulting from staggered work hours," Journal of Urban Economics, Elsevier, vol. 24(1), pages 9-26, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carrion, Carlos & Levinson, David, 2012. "Value of travel time reliability: A review of current evidence," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(4), pages 720-741.
    2. Kenneth Small, 2015. "The Bottleneck Model: An Assessment and Interpretation," Working Papers 141506, University of California-Irvine, Department of Economics.
    3. Small, Kenneth A., 2015. "The bottleneck model: An assessment and interpretation," Economics of Transportation, Elsevier, vol. 4(1), pages 110-117.
    4. Börjesson, Maria & Eliasson, Jonas, 2014. "Experiences from the Swedish Value of Time study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 144-158.
    5. Peer, Stefanie & Knockaert, Jasper & Koster, Paul & Verhoef, Erik T., 2014. "Over-reporting vs. overreacting: Commuters’ perceptions of travel times," Transportation Research Part A: Policy and Practice, Elsevier, vol. 69(C), pages 476-494.
    6. Peer, Stefanie & Knockaert, Jasper & Verhoef, Erik T., 2016. "Train commuters’ scheduling preferences: Evidence from a large-scale peak avoidance experiment," Transportation Research Part B: Methodological, Elsevier, vol. 83(C), pages 314-333.
    7. Mogens Fosgerau & Kenneth Small, 2017. "Endogenous Scheduling Preferences And Congestion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(2), pages 585-615, May.
    8. Peer, Stefanie & Verhoef, Erik T., 2013. "Equilibrium at a bottleneck when long-run and short-run scheduling preferences diverge," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 12-27.
    9. André de Palma & Mogens Fosgerau, 2011. "Dynamic Traffic Modeling," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 9, Edward Elgar Publishing.
    10. Mogens Fosgerau & Kurt Van Dender, 2013. "Road pricing with complications," Transportation, Springer, vol. 40(3), pages 479-503, May.
    11. Paul Koster & Hans Koster, 2013. "Analysing Heterogeneity in the Value of Travel Time and Reliability: A Semiparametric Estimation Approach," ERSA conference papers ersa13p1032, European Regional Science Association.
    12. Stefanie Peer & Erik Verhoef & Jasper Knockaert & Paul Koster & Yin-Yen Tseng, 2011. "Long-Run vs. Short-Run Perspectives on Consumer Scheduling: Evidence from a Revealed-Preference Experiment among Peak-Hour Road Commuters," Tinbergen Institute Discussion Papers 11-181/3, Tinbergen Institute, revised 25 Aug 2014.
    13. Xiao, Yu & Fukuda, Daisuke, 2015. "On the cost of misperceived travel time variability," Transportation Research Part A: Policy and Practice, Elsevier, vol. 75(C), pages 96-112.
    14. Nicolas Coulombel & André de Palma, 2014. "The marginal social cost of travel time variability," Post-Print hal-01100105, HAL.
    15. André de Palma & Mogens Fosgerau, 2010. "Dynamic and Static congestion models: A review," Working Papers hal-00539166, HAL.
    16. Jan-Erik Swärdh & Staffan Algers, 2016. "Willingness to accept commuting time within the household: stated preference evidence," Transportation, Springer, vol. 43(2), pages 219-241, March.
    17. Li, Zhi-Chun & Huang, Hai-Jun & Yang, Hai, 2020. "Fifty years of the bottleneck model: A bibliometric review and future research directions," Transportation Research Part B: Methodological, Elsevier, vol. 139(C), pages 311-342.
    18. Stefanie Peer & Erik Verhoef & Jasper Knockaert & Paul Koster & Yin‐Yen Tseng, 2015. "Long‐Run Versus Short‐Run Perspectives On Consumer Scheduling: Evidence From A Revealed‐Preference Experiment Among Peak‐Hour Road Commuters," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(1), pages 303-323, February.
    19. Hugo E. Silva & Robin Lindsey & André de Palma & Vincent A. C. van den Berg, 2017. "On the Existence and Uniqueness of Equilibrium in the Bottleneck Model with Atomic Users," Transportation Science, INFORMS, vol. 51(3), pages 863-881, August.
    20. Tsoleridis, Panagiotis & Choudhury, Charisma F. & Hess, Stephane, 2022. "Deriving transport appraisal values from emerging revealed preference data," Transportation Research Part A: Policy and Practice, Elsevier, vol. 165(C), pages 225-245.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecotra:v:1:y:2012:i:1:p:2-14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecotra .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.