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Sensitivity Of The Value Of Time To The Specification Of Income In Discrete Choice Models

Author

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  • Sergio Jara-Diaz
  • Marcela Munizaga
  • Reinaldo Guerra

Abstract

The subjective value of time calculated from discrete choice models is shown to be quite sensitive to a cost over income variable even if the income variance is small. Considering a linear in cost specification as a basis for comparison, a cost over income specification of modal utility is used to examine analytically the variation of the cost and time coefficients for a logit model - with all the usual properties - to a small change in the income variance ; the simulated derivatives suggest that the cost coefficient changes by a substantially larger amount than the time coefficient. This is confirmed using a simulated data base for mode choice, showing that the value of travel time increases ten times as the coefficient of variation of income is increased from zero (linear in cost) to a modest 0.3. This shows the sensitivity of the value of time to the specification of income, a serious problem when using choice models for policy analysis. A practical procedure to test and a possible practical solution to this problem is also suggested.

Suggested Citation

  • Sergio Jara-Diaz & Marcela Munizaga & Reinaldo Guerra, 2012. "Sensitivity Of The Value Of Time To The Specification Of Income In Discrete Choice Models," Articles, International Journal of Transport Economics, vol. 39(2).
    • Handle: RePEc:jte:journl:2012:2:39:3
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    Cited by:

    1. Lizana, Pedro & Ortúzar, Juan de Dios & Arellana, Julián & Rizzi, Luis I., 2021. "Forecasting with a joint mode/time-of-day choice model based on combined RP and SC data," Transportation Research Part A: Policy and Practice, Elsevier, vol. 150(C), pages 302-316.
    2. Jara-Díaz, Sergio & Rosales-Salas, Jorge, 2017. "Beyond transport time: A review of time use modeling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 97(C), pages 209-230.

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