Unit income elasticity of the value of travel time savings

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Unit income elasticity of the value of travel time savings

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Mogens Fosgerau (Danish Transport Research Institute)

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Mogens Fosgerau

Abstract

The paper presents an analysis of the income elasticity of the value of travel time savings (VTTS). It expands on previous micro-econometric estimates of the VTTS on binary choice experimental data by accounting for income taxes, for the dependence of trip length on income and for the stochastic distribution of the VTTS using semiparametric methods. Previous empirical estimates of the elasticity are around 0.6 while in practice i.a. Denmark and the UK (until 2004) apply a unit income elasticity for forecasting the future VTTS in economic evaluations of transport projects. This discrepancy may be resolved as shown in the paper.

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Paper provided by EconWPA in its series Urban/Regional with number 0508007.

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Length: 24 pages
Date of creation: 23 Aug 2005
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Handle: RePEc:wpa:wuwpur:0508007

Note: Type of Document - pdf; pages: 24
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Find related papers by JEL classification:
R22 - Urban, Rural, and Regional Economics - - Household Analysis - - - Other Demand
R41 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Transportation: Demand, Supply, and Congestion
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models

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.:

DeSerpa, A C, 1971. "A Theory of the Economics of Time," Economic Journal, Royal Economic Society, vol. 81(324), pages 828-46, December. [Downloadable!] (restricted)
Mogens Fosgerau, 2004. "Investigating the distribution of the value of travel time savings," Urban/Regional 0410005, EconWPA, revised 25 Nov 2004. [Downloadable!]
Other versions:
- Mogens Fosgerau, 2004. "Investigating the distribution of the value of travel time savings," Urban/Regional 0411006, EconWPA. [Downloadable!]

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Cited by:
(explanations, 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.)

Swärdh, Jan-Erik, 2008. "Is the intertemporal income elasticity of the value of travel time unity?," Working Papers 2008:3, Swedish National Road & Transport Research Institute (VTI). [Downloadable!]

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