Method of Obtaining Consumer Welfare from Regional Travel Demand Models

The need for more comprehensive traveler welfare measures is highlighted by the U.S. Intermodal Surface Transportation Efficiency Act (1991) requirement that transportation projects and plans be evaluated for economic efficiency. However, to date, there has been a discrepancy between this requirement and the methods used by regional transportation organizations to evaluate transportation policies in the United States. Kenneth Small and Harvey Rosen illustrate how a consumer welfare measure known as compensating variation can be obtained from discrete choice models. A method of application is developed for the mode choice models in the Sacramento Regional Travel Demand Model. The results of the method’s application to the model for light rail transit, high-occupancy vehicle lanes, and auto pricing scenarios are examined for both total consumer welfare and consumer welfare by income class.