Accommodating risk in the valuation of expected travel time savings

Valuation of travel time savings is a critical measure in transport infrastructure appraisal, traffic modelling and network performance. It has been recognised for some time that the travel times associated with repeated trips are subject to variation, and hence there is risk embedded in the treatment of expected travel time. In the context of the expected utility framework, we use a nonlinear probability weighting function to accommodate choice made under risk. Although the empirical findings suggest small differences between the value of expected travel time savings (VETTS) in the presence and absence of risk, the mean estimate does make a noticeable difference to time benefits when applied to real projects. By incorporating nonlinear probability weighting, our model reveals that the probabilities associated with specific travel times that are shown to respondents in the choice experiment are transformed, resulting in overweighting of outcomes with low probabilities and underweighting of outcomes with high probabilities. Copyright © 2011 John Wiley & Sons, Ltd.     

The variation in the value of travel-time savings and the dilemma of high-speed rail in China

This paper examines the variation in the value of travel-time savings (VTTS), a fundamental element determining the market demand for high-speed rail. Following a review of time allocation theories, a time allocation model for general travel behavior is proposed as a further elaboration of Evans’ (1972) activities analysis. There are relationships among activities that can be expressed using a linear inequality to show the constraints on the arrangement of activities. This model indicates that two or more activities can be simultaneously rearranged to improve time management, which may be a source of variation in VTTS. This time allocation model can explain why large-scale high-speed rail construction in China faces significant market risks and a high likelihood of economic loss. Data from a new ticket sales and booking system for railway passengers indicate that passengers prefer conventional overnight sleeper trains, rather than high-speed trains, for long-distance travel, which supports the analysis of the time allocation model.     

The congestion multiplier: Variations in motorists’ valuations of travel time with traffic conditions

The value of travel time savings in part depends upon the disutility of the travel time that is saved and partly on the use to which the time saved is put. It has long been recognised that the disutility of the time spent travelling also depends upon a wide range of factors such as the journey length or the effort, comfort and safety associated with travelling.Hence we might expect the value of motorists’ travel time to vary with the traffic conditions as represented by the degree of congestion, in part to reflect the more difficult driving environment when there are more vehicles, but also a higher sense of frustration, similar to that associated with waiting time and contributing to its premium valuation.In this context, and despite the predominance of car travel in developed countries, the empirical evidence specifically relating to car values of travel time tends to fail to distinguish between different types of time according to the degree of congestion. Thus we are often left unclear as to precisely what type of time has been valued. Moreover, when a distinction is made, it tends to be into a simple dichotomy of congested and uncongested traffic.This paper provides new evidence on the variation in the valuation of motorists’ travel time savings across a finer gradation of types of time than has been hitherto attempted. This is obtained from the same Stated Choice exercise conducted in the United Kingdom and the United States. The paper also provides an extensive account of previous research into how congestion impacts on motorists’ values of time.     

Variation in the value of travel time savings and its impact on the benefits of managed lanes

This paper examines the variation in the value of travel time savings (VTTS) for travelers with a managed lane (ML) option when taking an ordinary trip versus a trip that is unusual in some way. VTTS estimates vary substantially depending on the urgency of the trip made. At the low end, the mean VTTS for a traveler who wants to make extra stops and still arrive on time is approximately 10% higher than that for an ordinary trip. At the high end, a traveler running late for an appointment shows a mean VTTS that is approximately 300% higher than that for an ordinary trip. These estimates vary widely over the population of travelers. In light of these variations, the value of an uncongested travel alternative (such as MLs) is examined and found to be greatly undervalued if using typical VTTS estimates.     

The value of time and external benefits in bicycle appraisal

We estimate the value of time savings, different cycling environments and additional benefits in cost-benefit analysis of cycling investments. Cyclists’ value of travel time savings turns out to be high, considerably higher than the value of time savings on alternative modes. Cyclists also value other improvements highly, such as separated bicycle lanes. As to additional benefits of cycling improvements in the form of health and reduced car traffic, our results do not support the notion that these will be a significant part in a cost-benefit analysis. Bicyclists seem to take health largely into account when making their travel choices, implying that it would be double-counting to add total health benefits to the analysis once the consumer surplus has been correctly calculated. As to reductions in car traffic, our results indicate that the cross-elasticity between car and cycle is low, and hence benefits from traffic reductions will be small. However, the valuations of improved cycling speeds and comfort are so high that it seems likely that improvements for cyclists are cost-effective compared to many other types of investments, without having to invoke second-order, indirect effects. In other words, our results suggest that bicycle should be viewed as a competitive mode of travel and not primarily as a means to achieve improved health or reduced car traffic.     

Evidence on the distribution of values of travel time savings from a six-week diary

This paper presents the results of a series of mixed logit models focusing on the distribution of the values of travel time savings. The parametric assumptions include both normal and various bounded distributions derived from the normal (log-normal, Johnson’s S_b and a censored normal). The full model, which also incorporates a number of time budget related variables, indicates that a small, but relevant share of the respondents might not value time savings, or would rather extend the journey. This share is consistent with results from other studies. A series of models for the different types of tours indicate even higher potential shares in situations with typically fewer binding time constraints.The RP data used is derived from the six week travel diary Mobidrive. The observations from Karlsruhe are summarised at the level of the tour.     

The effect of socio-economic factors on the value of time in commuting to work

It is important to specify accurately the dollar value assigned to time savings, since up to eighty percent of the benefits estimated to accrue from improvements in transportation systems are associated with savings in travel time. In this paper the economic theory of consumer choice is utilized to structure a model that is used to estimate how Value of Time (VOT) measures vary with community-related variables.Parameters for this theoretical model are empirically estimated using data from transportation surveys conducted in Ithaca and Syracuse, New York and Amherst, Massachusetts. The results confirm the validity of the theoretical model and suggest that leisure time, travel cost, and household income level, as well as community population, are important determinants of the marginal value of time. These models are particularly suited for transferring data results obtained in one community to another, thereby saving survey costs, since the resulting VOT estimates are based solely on underlying socio-economic variables and community characteristics that are known for most localities. The methodology is also useful for estimating different VDT's for particular population subgroups, like the elderly, which may be the focus of a particular transportation project.     

The valuation and demand impacts of the worthwhile use of travel time with specific reference to the digital revolution and endogeneity

Transportation - The research reported here is concerned with how the worthwhile use of travel time might impact on the value of travel time savings (VTTS) and on demand set in the context of the...     

The influence of travel time variability on the value of time

Current benefits from travel time savings have only been related to the benefits from reducing mean travel time. Some previous attempts of including variability in the generalised cost function have mainly assumed commuters with fixed arrival time. This paper presents a comprehensive framework for valuing travel time variability that allows for any journey purpose and arrival time constraint. The proposed model is based on the expected utility approach and the mean-standard deviation approach. Stated Preference methods are considered the best technique for providing the data for calibrating the models. The values of time derived from the models are highly influenced by the value of travel time variability and it strongly depends on the probability distribution function travellers are faced with.     

Using longitudinal methods for analysis of a short-term transportation demonstration project

This paper documents an application of panel, or longitudinal data collection in the evaluation of a TSM (Transportation Systems Management) demonstration project. The project was a four-week demonstration of staggered work hours in downtown Honolulu during February–March 1988. The 4 wave panel survey elicited commuting experiences of approximately 2,000 downtown employees at two week intervals before and during the project. The sample involved both employees who participated in the project by shifting their work hours, and those who did not. The panel survey was augmented by floating-car observations of travel times on major routes into downtown Honolulu on the same four dates.The purpose of the analysis was to determine whether employee commute times were affected, and if so, how these changes were distributed among various employee segments. Two methods were used. First, travel time changes were estimated using paired t-tests. Second, regression equations were used to estimate project time savings as a function of trip length, route, and location of residence. Results show that travel time savings due to the project were typically small, less than ten percent. Nonparticipants experienced greater savings than participants, and some segments of participants experienced longer travel times during the project. The panel method proved to be an effective way to measure project travel time impacts and shows that the method is appropriate in short time applications.Presented at the Annual Meeting of Transportation Research Board, January 7–11. 1990, Washington, D.C.     

The digital revolution and worthwhile use of travel time: implications for appraisal and forecasting

Savings in travel time and more specifically their monetary value typically constitute the main benefit to justify major investment in transport schemes. However, worthwhile use of travel time is an increasingly prominent phenomenon of the digital age. Accordingly, questions are increasingly being asked regarding whether values of time used by countries around the world based on their appraisal approaches are too high. This paper offers the most comprehensive examination of our theoretical and empirical understandings of international appraisal approaches and how they account for worthwhile use of travel time. It combines the economics perspective with wider social science insight and reaches the conclusion that past revolutions in transport that have made longer and quicker journeys possible are now joined by a digital revolution that is reducing the disutility of travel time. This revolution offers potential economic benefit that comes at a fraction of the cost of major investments in transport that are predicated on saving travel time. The paper highlights the challenges faced in both current and indeed potential alternative future appraisal approaches. Such challenges are rooted in the difficulty of measuring time use and productivity with sufficient accuracy and over time to credibly account for how travel time factors into the economic outcomes from social and working practices in the knowledge economy. There is a need for further research to: establish how improvements in the opportunities for and the quality of worthwhile use of travel time impact on the valuation of travel time savings for non-business travel; improve our understanding of how productive use of time impacts on the valuation of time savings for business travellers; and estimate how these factors have impacted on the demand for different modes of travel.     

Embedding risk attitude and decision weights in non-linear logit to accommodate time variability in the value of expected travel time savings

In recent years we have seen important extensions of logit models in behavioural research such as incorporation of preference and scale heterogeneity, attribute processing heuristics, and estimation of willingness to pay (WTP) in WTP space. With rare exception, however, a non-linear treatment of the parameter set to allow for behavioural reality, such as embedded risk attitude and perceptual conditioning of occurrence probabilities attached to specific attributes, is absent. This is especially relevant to the recent focus in travel behaviour research on identifying the willingness to pay for reduced travel time variability, which is the source of estimates of the value of trip reliability that has been shown to take on an increasingly important role in project appraisal. This paper incorporates, in a generalised non-linear (in parameters) logit model, alternative functional forms for perceptual conditioning (known as probability weighting) and risk attitude in the utility function to account for travel time variability, and then derives an empirical estimate of the willingness to pay for trip time variability-embedded travel time savings as an alternative to separate estimates of time savings and trip time reliability. We illustrate the richness of the approach using a stated choice data set for commuter choice between unlabelled attribute packages. Statistically significant risk attitude parameters and parameters underlying decision weights are estimated for multinomial logit and mixed multinomial logit models, along with values of expected travel time savings.     

The influence of interview location on the value of travel time savings

The value of travel time savings (VTTS) is used as input in traffic forecasting models and cost-benefit analyses, and it is typically estimated in stated choice studies in which preferences are derived. However, preferences are affected by the recollection of prior experience, and evidence suggests that the recollection of an event is different than the actual experience. Although the choice of interview location is likely to affect how long it has been since the respondents travelled, evidence is somewhat limited on the influence of interview location on VTTS. This paper investigates the role that interview location plays in the VTTS of ferry travellers. We find that the mean value of headway time savings is significantly higher among respondents interviewed onboard ferries than among those interviewed at home. The mean value of onboard time savings is significantly lower among those interviewed onboard the ferries than among those interviewed at home. Failure to take into account the influence of interview location might lead to biased estimates. To the extent that such biased estimates are used in cost-benefit analyses, this bias will affect the calculated welfare effects of changes in frequency and speed on scheduled passenger transport, resulting in suboptimal allocation of public resources.     

Vehicle value of travel time savings: Evidence from a group-based modelling approach

The value of travel time savings (VTTS) accounts for a majority of the total user benefits in economic appraisal of transport investments. This means that having an accurate estimate of VTTS for different segments of travel continues to retain currency, despite there being a rich literature on estimates of VTTS for different travel modes, travel purposes, income groups, life cycles, and distance bands. In contrast, there is a dearth of research and evidence on vehicle VTTS, although joint travel by car is an important segment of travel. This paper fills this gap by developing a group-based modelling approach to quantify the vehicle VTTS and compares this with the VTTS for a driver with and without a passenger. An online survey was conducted in Sydney in 2014 and the data used to obtain a number of new empirical estimates of vehicle and driver VTTS. The new evidence questions the validity of various assumptions adopted in current practice for valuing the time savings of car passengers and multiple occupant cars.     

The value of travel time savings in freight transport: a meta-analysis

Transportation - The value of freight travel time savings (VFTTS) is a monetary value that is considered an important input into cost–benefit analysis and traffic forecasting. The VFTTS is...     

Estimating the bus user time benefits of implementing a median busway: Methodology and case study

This paper presents a general framework to estimate the bus user time benefits of a median busway including the effects on travel time and access time. Unlike previous models, we take into account the effects of geometry and the interaction with the demand structure. Models for predicting the bus in-vehicle time benefits of a median dual carriageway busway against mixed traffic condition on 2 and 3 lanes roads are estimated using data from a case study in Santiago (Chile), using a bus travel time model empirically estimated and considering different base case situations, including mixed traffic operations and bus lanes. Results of the application show that the expected in-vehicle time savings of a median busway might be reduced by access time losses due to increased walking distances and road crossing delays. Also, that net time benefits can vary significantly according to the base situation and the structure of demand considered. These findings point out to the need of including a wider set of impacts when studying the benefits of median busways, beyond in-vehicle time savings only. The empirical work presented here is completely based on passive data coming from GPS and smartcards, what makes easier and cheaper to conduct this type of analysis as well as to do it with a comprehensive scope at an early stage of the development of a BRT project. This framework can be extended to other types of dedicated bus lanes provided that a corresponding bus travel time savings model is available.     

The value of travel time and reliability-evidence from a stated preference survey and actual usage

This research examined travel behavior of Managed Lane (ML) users to better understand the value travelers place on travel time savings and travel time reliability. We also highlight the importance of survey design techniques. These objectives were accomplished through a stated preference survey of Houston’s Katy Freeway travelers. Three stated choice experiment survey design techniques were tested in this study: Bayesian (D_b) efficient, random level attribute generation, and an adaptive random approach. Mixed logit models were developed from responses using each of those designs. The value of travel time savings (VTTSs) estimates do vary across the design strategies, with the VTTS estimates based on the D_b-efficient design being approximately half the estimates from the other two designs. However, among the three design strategies, the value of travel time reliability (VOR) was only significant in the D_b-efficient design.The estimated VTTS from actual Katy Freeway usage (as measured using actual tolls paid and travel time saved on the managed lanes) is $51/h. This likely also includes any value that travelers place on travel time reliability. In comparison, our combined estimate of VTTS and VOR based on the SP survey (D_b-efficient design) was $50/h, which is remarkably close to the estimate from the actual usage data. Based on our dataset, the D_b-efficient design technique proved superior to the other two techniques. Finally, this research also supports the importance of including both travel time and travel time reliability parameters when estimating the willingness to pay for, and therefore benefits derived from, ML travel.     

Capturing value of reliability through road pricing in congested traffic under uncertainty

Empirical studies showed that travel time reliability, usually measured by travel time variance, is strongly correlated with travel time itself. Travel time is highly volatile when the demand approaches or exceeds the capacity. Travel time variability is associated with the level of congestion, and could represent additional costs for travelers who prefer punctual arrivals. Although many studies propose to use road pricing as a tool to capture the value of travel time (VOT) savings and to induce better road usage patterns, the role of the value of reliability (VOR) in designing road pricing schemes has rarely been studied. By using road pricing as a tool to spread out the peak demand, traffic management agencies could improve the utility of travelers who prefer punctual arrivals under traffic congestion and stochastic network conditions. Therefore, we could capture the value of travel time reliability using road pricing, which is rarely discussed in the literature. To quantify the value of travel time reliability (or reliability improvement), we need to integrate trip scheduling, endogenous traffic congestion, travel time uncertainty, and pricing strategies in one modeling framework. This paper developed such a model to capture the impact of pricing on various costs components that affect travel choices, and the role of travel time reliability in shaping departure patterns, queuing process, and the choice of optimal pricing. The model also shows the benefits of improving travel time reliability in various ways. Findings from this paper could help to expand the scope of road pricing, and to develop more comprehensive travel demand management schemes.     

The Signs of the Times: Imposing a Globally Signed Condition on Willingness to Pay Distributions

A feature of recent developments in choice models that enable estimation of the distribution of willingness to pay (WTP) is that the sign of the distribution can change over the range. Behaviourally this often makes little sense for attributes such as travel time on non-discretionary travel, despite a growing recognition of positive utility over some travel time ranges. This can in part be attributed to the analytical distribution that is selected (except the cumbersome lognormal), many of which are unconstrained over the full range. Although a number of analysts have imposed constraints on various distributions for random parameters that can satisfy the single-sign condition, these restrictions are, with rare exception, only satisfied for the mean and the standard deviation estimates of a random parameter. When heterogeneity around the mean and/or heteroscedasticity around the standard deviation is allowed for, however, the constraint condition is often not satisfied. Given the popularity of distributions other than the lognormal, in order to satisfy the sign condition under the most general form of parameterisation, we need to impose a global sign condition. In this paper we show how this might be achieved in the context of the valuation of travel time savings for car commuters choosing amongst an offered set of route-specific travel times and costs. We illustrate the impact of the constraint under a globally constrained Rayleigh distribution for total travel time parameterisation, contrasting the evidence with a multinomial logit model and a range of other distributional assumptions within the mixed logit framework. Discussions with Bill Greene, John Rose, Ken Train and especially Juan de Dios Ortuzar have been invaluable as have the comments of referees.     

Network-wide impacts of eco-routing strategies: A large-scale case study

This paper quantifies the system-wide impacts of implementing a dynamic eco-routing system, considering various levels of market penetration and levels of congestion in downtown Cleveland and Columbus, Ohio, USA. The study concludes that eco-routing systems can reduce network-wide fuel consumption and emission levels in most cases; the fuel savings over the networks range between 3.3% and 9.3% when compared to typical travel time minimization routing strategies. We demonstrate that the fuel savings achieved through eco-routing systems are sensitive to the network configuration and level of market penetration of the eco-routing system. The results also demonstrate that an eco-routing system typically reduces vehicle travel distance but not necessarily travel time. We also demonstrate that the configuration of the transportation network is a significant factor in defining the benefits of eco-routing systems. Specifically, eco-routing systems appear to produce larger fuel savings on grid networks compared to freeway corridor networks. The study also demonstrates that different vehicle types produce similar trends with regard to eco-routing strategies. Finally, the system-wide benefits of eco-routing generally increase with an increase in the level of the market penetration of the system.