A Handbook of Transport Economics
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A Handbook of Transport Economics

Edited by André de Palma, Robin Lindsey, Emile Quinet and Roger Vickerman

Bringing together insights and perspectives from close to 70 of the world’s leading experts in the field, this timely Handbook provides an up-to-date guide to the most recent and state-of-the-art advances in transport economics. The comprehensive coverage includes topics such as the relationship between transport and the spatial economy, recent advances in travel demand analysis, the external costs of transport, investment appraisal, pricing, equity issues, competition and regulation, the role of public–private partnerships and the development of policy in local bus services, rail, air and maritime transport.
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Chapter 7: Valuation of Travel Time Savings

David A. Hensher


David A. Hensher INTRODUCTION The interest in valuing travel time savings (VTTS) continues unabated with a huge and growing theoretical and empirical literature. Time savings is still the most important user benefit in transportation studies in all of its manifestations. This includes trip time variability (or reliability), the heterogeneity of trip time such as free flow, slowed down and stop/start/crawl time for road-based modes; and walk, wait, transfer and in-vehicle standing/sitting time for public transport. In addition, many potential user benefits are correlates of travel time such as safety, ride quality and toll road payment mechanism, and can be expressed as equivalent VTTS in applications that use a generalized cost expression to evaluate the demand for competing options. In this chapter, we focus on theory and application. The chapter begins with an overview of the major theoretical and empirical themes including the broad distinction between utility maximization and productivity theoretic frameworks, empirical paradigms that have evolved to value time savings, especially the progress in how revealed (or market) preference and stated choice (SC) data is being used to estimate models to calculate VTTS; adjustments required in behavioral VTTS to obtain resource and equity values for economic evaluation; and the growth in VTTS over time. Given the presence of preference heterogeneity for attributes that are traded to establish estimates of VTTS across a sampled population, we draw on mixed logit models and stated choice methods (for example, optimal designs) that have now become the state of the art (and to some...

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