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Unit income elasticity of the value of travel time savings

Author

Listed:
  • Mogens Fosgerau

    (Danish Transport Research Institute)

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.

Suggested Citation

  • Mogens Fosgerau, 2005. "Unit income elasticity of the value of travel time savings," Urban/Regional 0508007, EconWPA.
  • Handle: RePEc:wpa:wuwpur:0508007 Note: Type of Document - pdf; pages: 24
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    File URL: http://econwpa.repec.org/eps/urb/papers/0508/0508007.pdf
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    References listed on IDEAS

    as
    1. Fosgerau, Mogens, 2006. "Investigating the distribution of the value of travel time savings," Transportation Research Part B: Methodological, Elsevier, vol. 40(8), pages 688-707, September.
    2. DeSerpa, A C, 1971. "A Theory of the Economics of Time," Economic Journal, Royal Economic Society, vol. 81(324), pages 828-846, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Fosgerau, Mogens & Bierlaire, Michel, 2007. "A practical test for the choice of mixing distribution in discrete choice models," Transportation Research Part B: Methodological, Elsevier, pages 784-794.
    2. Daisuke Fukuda & Tetsuo Yai, 2010. "Semiparametric specification of the utility function in a travel mode choice model," Transportation, Springer, pages 221-238.
    3. Fosgerau, Mogens, 2006. "Investigating the distribution of the value of travel time savings," Transportation Research Part B: Methodological, Elsevier, vol. 40(8), pages 688-707, September.
    4. repec:eee:transa:v:101:y:2017:i:c:p:163-176 is not listed on IDEAS
    5. Fosgerau, Mogens, 2007. "Using nonparametrics to specify a model to measure the value of travel time," Transportation Research Part A: Policy and Practice, Elsevier, pages 842-856.
    6. Axhausen, Kay, 2008. "Accessibility: Long Term Perspectives," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 1(2), pages 5-22.
    7. Börjesson, Maria & Fosgerau, Mogens & Algers, Staffan, 2012. "On the income elasticity of the value of travel time," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 368-377.
    8. Savage, Ian, 2010. "The dynamics of fare and frequency choice in urban transit," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(10), pages 815-829, December.
    9. 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).

    More about this item

    Keywords

    Willingness to pay; value of time; semiparametric; travel; transport;

    JEL classification:

    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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