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On the income elasticity of the value of travel time

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  • Börjesson, Maria
  • Fosgerau, Mogens
  • Algers, Staffan

Abstract

Transport infrastructure is long-term and in appraisal it is necessary to value travel time savings for future years. This requires knowing how the value of time (VTT) will develop over time as incomes grow. This paper investigates if the cross-sectional income elasticity of the VTT is equal to inter-temporal income elasticity. The study is based on two identical stated choice experiments conducted with a 13year interval. Results indicate that the relationship between income and the VTT in the cross-section has remained unchanged over time. As a consequence, the inter-temporal income elasticity of the VTT can be predicted based on cross-sectional income elasticity. However, the income elasticity of the VTT is not a constant but increases with income. For this reason, the average income elasticity of the VTT in the cross-sections has increased between the two survey years and can be expected to increase further over time.

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Bibliographic Info

Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

Volume (Year): 46 (2012)
Issue (Month): 2 ()
Pages: 368-377

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Handle: RePEc:eee:transa:v:46:y:2012:i:2:p:368-377

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Keywords: Income elasticity; Value of travel time; CBA; Inter-temporal income elasticity; Cross-section income elasticity; Temporal transferability;

References

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  1. Brownstone, David & Ghosh, Arindam & Golob, Thomas F. & Kazimi, Camilla & Van Amelsfort, Dirk, 2003. "Drivers' willingness-to-pay to reduce travel time: evidence from the San Diego I-15 congestion pricing project," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 37(4), pages 373-387, May.
  2. Brownstone, David & Small, Kenneth A., 2003. "Valuing Time and Reliability: Assessing the Evidence from Road Pricing Demonstrations," University of California Transportation Center, Working Papers qt95z0p35k, University of California Transportation Center.
  3. Mogens Fosgerau, 2004. "Investigating the distribution of the value of travel time savings," Urban/Regional, EconWPA 0411006, EconWPA.
  4. DeSerpa, A C, 1971. "A Theory of the Economics of Time," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 81(324), pages 828-46, December.
  5. Evans, Alan W, 1972. "On the Theory of the Valuation and Allocation of Time," Scottish Journal of Political Economy, Scottish Economic Society, vol. 19(1), pages 1-17, February.
  6. Fosgerau, Mogens & Bierlaire, Michel, 2007. "A practical test for the choice of mixing distribution in discrete choice models," MPRA Paper 42276, University Library of Munich, Germany.
  7. David A. Hensher, 2001. "Measurement of the Valuation of Travel Time Savings," Journal of Transport Economics and Policy, London School of Economics and University of Bath, London School of Economics and University of Bath, vol. 35(1), pages 71-98, January.
  8. Lars Hultkrantz & Reza Mortazavi, 2001. "Anomalies in the Value of Travel-Time Changes," Journal of Transport Economics and Policy, London School of Economics and University of Bath, London School of Economics and University of Bath, vol. 35(2), pages 285-299, 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, Elsevier, vol. 32(4), pages 315-325, November.
  10. Jiang, Meilan & Morikawa, Takayuki, 2004. "Theoretical analysis on the variation of value of travel time savings," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 38(8), pages 551-571, October.
  11. Wardman, Mark, 2004. "Public transport values of time," Transport Policy, Elsevier, vol. 11(4), pages 363-377, October.
  12. Mogens Fosgerau, 2005. "Unit income elasticity of the value of travel time savings," Urban/Regional, EconWPA 0508007, EconWPA.
  13. 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, Elsevier, vol. 45(1), pages 1-17, January.
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Citations

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Cited by:
  1. Hultkrantz, Lars & Krüger, Niclas & Mantalos , Panagiotis, 2012. "Risk-adjusted long term social rates of discount for transportation infrastructure investment," Working Papers, Örebro University, School of Business 2012:14, Örebro University, School of Business.
  2. Hultkrantz, Lars & Svensson, Mikael, 2012. "A Comparison of Benefit Cost and Cost Utility Analysis in Practice: Divergent Policies in Sweden," Karlstad University Working Papers in Economics 1, Department of Economics, Karlstad University.
  3. Börjesson, Maria & Eliasson, Jonas, 2014. "Experiences from the Swedish Value of Time study," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 59(C), pages 144-158.
  4. Maria Börjesson, 2014. "Inter-temporal variation in the travel time and travel cost parameters of transport models," Transportation, Springer, Springer, vol. 41(2), pages 377-396, March.
  5. Mouter, Niek & Annema, Jan Anne & van Wee, Bert, 2013. "Ranking the substantive problems in the Dutch Cost–Benefit Analysis practice," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 49(C), pages 241-255.
  6. Börjesson, Maria & Eliasson, Jonas, 2011. "The value of time and external benefits in bicycle appraisal," Working papers in Transport Economics, CTS - Centre for Transport Studies Stockholm (KTH and VTI) 2011:22, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
  7. Börjesson, Maria & Jonsson, Daniel & Lundberg , Mattias, 2013. "An ex-post CBA for the Stockholm Metro," Working papers in Transport Economics, CTS - Centre for Transport Studies Stockholm (KTH and VTI) 2013:34, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
  8. Börjesson, Maria, 2012. "Inter-temporal variation in the travel time and travel cost parameters of transport models," Working papers in Transport Economics, CTS - Centre for Transport Studies Stockholm (KTH and VTI) 2012:16, CTS - Centre for Transport Studies Stockholm (KTH and VTI).

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