Advanced Search
MyIDEAS: Login to save this paper or follow this series

Preference heterogeneity and willingness to pay for travel time

Contents:

Author Info

  • Francisco Javier Amador

    ()
    (Universidad de La Laguna; Instituto Universitario de Desarrollo Regional and Departamento de Análisis Económico; Tenerife; Spain)

  • Rosa Marina González

    ()
    (Universidad de La Laguna; Instituto Universitario de Desarrollo Regional and Departamento de Análisis Económico; Tenerife; Spain)

  • Juan de Dios Ortúzar

    ()
    (Pontificia Universidad Católica de Chile;Departament of Transport Engineering; Santiago; Chile)

Abstract

We examined different model specifications to detect the presence of preference heterogeneity in a mode choice context. The specification that worked best allows for both systematic and random variations in tastes. Using parameters obtained at the individual level through Bayesian inference methods, subjective values of travel time (SVT) and expected individual compensated variation were derived and aggregated to obtain measures of social welfare. Results suggest that the benefit measures, both at the individual and at the social level, are sensitive to preference heterogeneity assumptions. SVT and welfare changes derived from travel time reductions could be underestimated if the traditional assumption of taste homogeneity is made (we detected differences up to 30% in both types of measures). We also obtained an empirical value for the error made when evaluating changes in social welfare using an approximation of the expected individual compensated variation (expressed as a function of individual SVT) rather than its exact expression.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.bibliotecas.ulpgc.es/fcee/hemeroteca/documentos%20de%20trabajo/DocumentosDTrabajo/doc52/DT2004-12.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Facultad de Ciencias Económicas de la ULPGC in its series Documentos de trabajo conjunto ULL-ULPGC with number 2004-12.

as in new window
Length: 26 pages
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:can:series:2004-12

Contact details of provider:

Related research

Keywords: Preference heterogeneity; subjective value of travel time; compensated variation; random parameters logit; Bayesian methods;

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Herriges, Joseph A. & Kling, Catherine L., 1999. "Nonlinear Income Effects in Random Utility Models," Staff General Research Papers 1494, Iowa State University, Department of Economics.
  2. Jara-Diaz, Sergio R., 1990. "Consumer's surplus and the value of travel time savings," Transportation Research Part B: Methodological, Elsevier, vol. 24(1), pages 73-77, February.
  3. Jara-Díaz, Sergio R. & Videla, Jorge, 1989. "Detection of income effect in mode choice: Theory and application," Transportation Research Part B: Methodological, Elsevier, vol. 23(6), pages 393-400, December.
  4. 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.
  5. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, Spring.
  6. Algers, S. & Bergstrom, P. & Dahlberg, M. & Dillen, J.L., 1998. "Mixed Logit Estimation of the Value of Travel Time," Papers 1998:15, Uppsala - Working Paper Series.
  7. Bates, John J, 1987. "Measuring Travel Time Values with a Discrete Choice Model: A Note," Economic Journal, Royal Economic Society, vol. 97(386), pages 493-98, June.
  8. Joel Huber and Kenneth Train., 2000. "On the Similarity of Classical and Bayesian Estimates of Individual Mean Partworths," Economics Working Papers E00-289, University of California at Berkeley.
  9. H C W L Williams, 1977. "On the formation of travel demand models and economic evaluation measures of user benefit," Environment and Planning A, Pion Ltd, London, vol. 9(3), pages 285-344, March.
  10. Allenby, Greg M. & Rossi, Peter E., 1998. "Marketing models of consumer heterogeneity," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 57-78, November.
  11. Daniel McFadden, 1996. "Computing Willingness-to-Pay in Random Utility Models," Working Papers _011, University of California at Berkeley, Econometrics Laboratory Software Archive.
  12. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
  13. Gaudry, Marc J. I. & Jara-Diaz, Sergio R. & Ortuzar, Juan de Dios, 1989. "Value of time sensitivity to model specification," Transportation Research Part B: Methodological, Elsevier, vol. 23(2), pages 151-158, April.
  14. Carlsson, Fredrik, 1999. "The Demand for Intercity Public Transport: The Case of Business Passengers," Working Papers in Economics 12, University of Gothenburg, Department of Economics.
  15. von Haefen, Roger H., 2003. "Incorporating observed choice into the construction of welfare measures from random utility models," Journal of Environmental Economics and Management, Elsevier, vol. 45(2), pages 145-165, March.
  16. Herriges, Joseph A. & Kling, Catherine L., 2003. "Recreation Demand Models," Staff General Research Papers 10211, Iowa State University, Department of Economics.
  17. David Hensher, 2001. "The valuation of commuter travel time savings for car drivers: evaluating alternative model specifications," Transportation, Springer, vol. 28(2), pages 101-118, May.
  18. Bhat, Chandra R., 2001. "Quasi-random maximum simulated likelihood estimation of the mixed multinomial logit model," Transportation Research Part B: Methodological, Elsevier, vol. 35(7), pages 677-693, August.
  19. Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, vol. 49(1), pages 105-30, January.
  20. Kenneth E. Train, 1998. "Recreation Demand Models with Taste Differences over People," Land Economics, University of Wisconsin Press, vol. 74(2), pages 230-239.
  21. Alpizar, Francisco & Carlsson, Fredrik, 2003. "Policy implications and analysis of the determinants of travel mode choice: an application of choice experiments to metropolitan Costa Rica," Environment and Development Economics, Cambridge University Press, vol. 8(04), pages 603-619, October.
  22. David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
  23. McCulloch, Robert & Rossi, Peter E., 1994. "An exact likelihood analysis of the multinomial probit model," Journal of Econometrics, Elsevier, vol. 64(1-2), pages 207-240.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:can:series:2004-12. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Patricia Santana).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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