Avoiding specification errors in estimating the value of time

Sources of specification as well as measurement error in previous estimates of the value of time are examined in this paper, and a new set of estimates avoiding these errors is presented. The sources of specification error being analyzed are: (1) failure to take account of drivers' uncertainty in making their choices between alternative routes or modes, which was found empirically to bias the value of time estimate 50 percent or more; (2) the differential in comfort and similar intangible characteristics between two modes; and (3) the inability to account for cross-time substitutions by travelers in peak-hour conditions. Ways of avoiding these sources of error are suggested and implemented. The choice between “reported” and “measured” data is re-examined, with an emphasis on random rather than systematic perception errors by travelers. Some resulting estimates are: $1.91 per hour per adult for off-peak work trips, $2.08 for off-peak social-recreational trips, and $5.17 for peak-hour work trips.