Accommodating Risk in the Valuation of Expected Travel Time Savings

This article explores how valuation of travel time savings (VTTS) can be used as a critical measure in transport infrastructure appraisal, traffic modeling and network performance. The authors note 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. They use a nonlinear probability weighting function to accommodate choice made under risk. Their empirical study used a 2008 stated choice data set from Australia for commuters choosing amongst alternative trip attribute packages for car travel. Findings suggest only small differences between the value of expected travel time savings (VETTS) in the presence and absence of risk, but the authors maintain that the mean estimate makes a noticeable difference to time benefits when applied to real projects. By incorporating nonlinear probability weighting, the model presented in this article finds that the probabilities associated with specific travel times that are shown to respondents in the choice experiment are transformed. This results in overweighting of outcomes with low probabilities and underweighting of outcomes with high probabilities. The authors conclude that the VTTS that applies to an individual travel activity and response is inherently linked to the degree of variability of the travel time, which is present every time a commuter commences a car trip.

[1]  D. Hensher,et al.  Prospect Theoretic Contributions in Understanding Traveller Behaviour: A Review and Some Comments , 2011 .

[2]  D. Hensher,et al.  Willingness to pay for travel time reliability in passenger transport: A review and some new empirical evidence , 2010 .

[3]  Marco Kouwenhoven,et al.  Preliminary monetary values for the reliability of travel times in freight transport , 2009 .

[4]  G. Harrison,et al.  Expected utility theory and prospect theory: one wedding and a decent funeral , 2009 .

[5]  P. Wakker.  Explaining the characteristics of the power (CRRA) utility family. , 2008, Health economics.

[6]  Anna Matas,et al.  Commuters' valuation of travel time variability , 2008 .

[7]  John M. Rose,et al.  Asymmetric preference formation in willingness to pay estimates in discrete choice models , 2008 .

[8]  Chih-Cheng Chen,et al.  Dynamic commuter departure time choice under uncertainty , 2008 .

[9]  John M. Rose,et al.  Designing efficient stated choice experiments in the presence of reference alternatives , 2008 .

[10]  D. Ettema,et al.  Coping with Unreliable Transportation When Collecting Children: Examining Parents’ Behavior with Cumulative Prospect Theory , 2009 .

[11]  Arne Risa Hole,et al.  A comparison of approaches to estimating confidence intervals for willingness to pay measures. , 2007, Health economics.

[12]  Anders Karlström,et al.  The value of reliability , 2007 .

[13]  Yaron Hollander,et al.  Direct versus indirect models for the effects of unreliability , 2006 .

[14]  D. Hensher.  How do respondents process stated choice experiments? Attribute consideration under varying information load , 2006 .

[15]  Juan de Dios Ortúzar,et al.  Preference Heterogeneity and Willingness to Pay for Travel Time Savings , 2004 .

[16]  D. Brownstone,et al.  Estimating Commuters' "Value of Time" with Noisy Data: a Multiple Imputation Approach , 2004 .

[17]  David A. Hensher,et al.  The Mixed Logit Model: the State of Practice and Warnings for the Unwary , 2001 .

[18]  C. Winston,et al.  UNCOVERING THE DISTRIBUTION OF MOTORISTS' PREFERENCES FOR TRAVEL TIME AND RELIABILITY : IMPLICATIONS FOR ROAD PRICING , 2002 .

[19]  D. Brownstone,et al.  Drivers' Willingness-to-Pay to Reduce Travel Time: Evidence from the San Diego I-15 Congestion Pricing Project , 2002 .

[20]  Charles A. Holt,et al.  Risk Aversion and Incentive Effects , 2002 .

[21]  K. McConnell,et al.  Valuing Environmental and Natural Resources , 2002 .

[22]  D. Hensher.  The valuation of commuter travel time savings for car drivers: evaluating alternative model specifications , 2001 .

[23]  J. Bates,et al.  The valuation of reliability for personal travel , 2001 .

[24]  Kenneth A. Small,et al.  The Value of Time and Reliability: Measurement from a Value Pricing Experiment , 2001 .

[25]  Juan de Dios Ortúzar,et al.  Confidence intervals to bound the value of time , 2001 .

[26]  C. A. Guevara,et al.  BEHIND THE SUBJECTIVE VALUE OF TRAVEL TIME SAVINGS: THE PERCEPTION OF WORK, LEISURE AND TRAVEL. , 2001 .

[27]  D. McFadden,et al.  MIXED MNL MODELS FOR DISCRETE RESPONSE , 2000 .

[28]  David A. Hensher,et al.  Measurement of the Valuation of Travel Time Savings , 2000 .

[29]  Robert B. Noland,et al.  VALUATION OF TRAVEL-TIME SAVINGS AND PREDICTABILITY IN CONGESTED CONDITIONS FOR HIGHWAY USER-COST ESTIMATION , 1999 .

[30]  K. Train,et al.  Forecasting new product penetration with flexible substitution patterns , 1998 .

[31]  C. Winston,et al.  The value of automobile travel time: implications for congestion policy , 1998 .

[32]  Robert B. Noland,et al.  Simulating Travel Reliability , 1997 .

[33]  Robert B. Noland,et al.  Travel-time uncertainty, departure time choice, and the cost of morning commutes , 1995 .

[34]  A. Tversky,et al.  Weighing Risk and Uncertainty , 1995 .

[35]  Luiz Afonso dos Santos Senna,et al.  The influence of travel time variability on the value of time , 1994 .

[36]  Colin Camerer,et al.  Violations of the betweenness axiom and nonlinearity in probability , 1994 .

[37]  A. Tversky,et al.  Advances in prospect theory: Cumulative representation of uncertainty , 1992 .

[38]  I. Krinsky,et al.  On Approximating the Statistical Properties of Elasticities , 1986 .

[39]  J. Jucker,et al.  An Empirical Study of Travel Time Variability and Travel Choice Behavior , 1982 .

[40]  Kenneth A. Small,et al.  THE SCHEDULING OF CONSUMER ACTIVITIES: WORK TRIPS , 1982 .

[41]  M. Allais.  Le comportement de l'homme rationnel devant le risque : critique des postulats et axiomes de l'ecole americaine , 1953 .