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Value of Time: Speeding Behavior and Gasoline Prices

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  • Wolff, Hendrik

    (London School of Economics)

Abstract

Do drivers reduce speeds when gasoline prices are high? Previous research investigating this energy conservation hypothesis produced mixed results. We take a fresh look at the data and estimate a significant negative relationship between speeding and gasoline prices. This presents a new methodology of deriving the 'Value of Time' (VOT) based on the intensive margin (previous VOT studies compare across the extensive margin) which has important advantages to circumvent potential omitted variable problems. While our VOT is 50% of the gross wage rate, we show that previous stated preference estimates are likely downward, whereas previous revealed preference estimates are systematically upward biased. We discuss implications, as VOT today is a key parameter in economics and policy.

Suggested Citation

  • Wolff, Hendrik, 2012. "Value of Time: Speeding Behavior and Gasoline Prices," IZA Discussion Papers 6788, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp6788
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    References listed on IDEAS

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    1. How to infer the value of time from gasoline prices
      by Economic Logician in Economic Logic on 2012-10-29 19:11:00

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    Cited by:

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    2. Tscharaktschiew, Stefan, 2014. "Shedding light on the appropriateness of the (high) gasoline tax level in Germany," Economics of Transportation, Elsevier, vol. 3(3), pages 189-210.
    3. van Benthem, Arthur, 2015. "What is the optimal speed limit on freeways?," Journal of Public Economics, Elsevier, vol. 124(C), pages 44-62.
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    Keywords

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    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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