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A Note on High-Speed Rail Investments and Travelers’ Value of Time

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Author Info

  • Hultkrantz, Lars

    ()
    (Department of Business, Economics, Statistics and Informatics)

Abstract

High-Speed Rail (HSR) is designed for travelers with high value of time. HSR offer fast and reliable services and good possibilities for work during the journey. Surprisingly, these benefits of HSR investment proposals are often appraised by use of travel-time valuations of people who use conventional (intercity) train services. The standard approach builds on two major assumptions, linearity of demand, and that the value of time is unchanged between the “before” and “after” alternatives, i.e., that change in the average value of time of passengers can be ignored. While the first of these is well known, the second is not always observed. However, the spread of values of time between individual travelers is large and is an essential motivation for HSR investments. This note therefore considers whether the assumption that the value of time remains unchanged by the speed improvement induces any significant bias in the appraisal. We first use a modal-mix model where travelers have varying value of time to outline some conceptual points and then discuss to what extent these may affect the social profitability of three recently constructed or proposed HSR lines: Oslo- Stockholm (Norway and Sweden), Stockholm-Göteborg (Sweden) and Beijing-Shanghai Hongqiao (China). We conclude that a RoHbased evaluation of an HSR line should be complemented by a sensitivity analysis of how the outcome is affected by possible changes of the composition of travelers with different values of time.

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Bibliographic Info

Paper provided by Örebro University, School of Business in its series Working Papers with number 2012:13.

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Length: 23 pages
Date of creation: 06 Dec 2012
Date of revision:
Handle: RePEc:hhs:oruesi:2012_013

Contact details of provider:
Postal: Örebro University School of Business, SE - 701 82 ÖREBRO, Sweden
Phone: 019-30 30 00
Fax: 019-33 25 46
Web page: http://www.oru.se/Institutioner/Handelshogskolan-vid-Orebro-universitet/
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Related research

Keywords: Cost-benefit analysis; rule-of-a-half; high-speed rail;

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References

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  1. Vicente Inglada & GinÊs de Rus, 1997. "Cost-benefit analysis of the high-speed train in Spain," The Annals of Regional Science, Springer, vol. 31(2), pages 175-188.
  2. Wen-Chyuan Chiang & Jason C.H. Chen & Xiaojing Xu, 2007. "An overview of research on revenue management: current issues and future research," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 1(1), pages 97-128.
  3. Lyons, Glenn & Jain, Juliet & Holley, David, 2007. "The use of travel time by rail passengers in Great Britain," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(1), pages 107-120, January.
  4. Gerard De Jong & Andrew Daly & Marits Pieters & Toon Van der Hoorn, 2005. "The logsum as an evaluation measure - review of the literature and new results," ERSA conference papers ersa05p158, European Regional Science Association.
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Cited by:
  1. 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.

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