Whatís your time worth?
Much of public policy is a struggle between modelers and reality. Models overestimate occupancy rates for publicly financed convention hotels, and ridership for light rail. And some transportation models are so numb to people's ability to react to changing circumstances that they fail to acknowledge that the time people spend traveling to and from work, plus the time they spend at work must be less than 24 hours. In other words, (even if the model says otherwise) commuters won't endure longer and longer travel times forever. Eventually, they will do something about it. So it's nice to see researchers examine reality to learn how motorists value their time, even if the results are rather unsurprising. In this case, the evidence comes from high-occupancy toll lanes in Southern California (where motorists driving alone may escape gridlock by paying a variable toll). From Bob Poole's latest Surface Transportation Innovations newsletter: Ken Small, Cliff Winston, and Jia Yan have realized that standard models tend to assume a uniform "value of time" for everyone in a metro area. We all know this is incorrect; value of time varies not only from person to person but from trip to trip, depending on its purpose, traffic conditions, etc. What they set out to do is to explore the extent of this heterogeneity, using real-world data from the 91 Express Lanes in Orange County and then to use this information in modeling alternative pricing policies. Using data from both stated preference (SP) surveys and revealed preference (RP) surveys, they used new analytical methods to estimate heterogeneity, not only of travel time itself but also of the reliability of travel time. The results are pretty surprising. The median value of rush-hour time estimated from RP data (what people actually do) is $21.46/hour, as compared with that from SP data (what people say in response to hypothetical questions), which was only $11.92/hour. But even more interesting is the range of time values. In the RP case, this ranges from a low of $11.47/hr. up to $29.32/hr., with correspondingly lower figures for the SP case. In addition to travel time itself, they estimated the value of travel-time reliability during rush hours. Again, the RP values were much higher, with a median of $19.56 and a range of from $6.26 to a whopping $42.80/hour. Adding the two medians (value of travel time plus value of reliability) produces a value very close to the peak toll rate charged during rush hours on the 91 Express Lanes during the time period when the survey data were collected.