Travel Time Valuation through Hedonic Regression

and the empirical literature of economics. In the numerous attempts to estimate the benefits of travel time savings, there is a wide diversity in methodology and little agreement on the proper approach to estimation. The objective of this paper is to present a different and more thorough approach to an analysis of the valuation of travel time. Rather than merely providing a single estimate, use of an hedonic price function and marginal valuation functions allows analysis of how time savings benefits vary with type of travel, distance of trip and socio-economic characteristics of the commuter. Moreover, the strength of complementarity between different modes of a multi-modal trip can be examined. The resulting estimates have implications for commuter transportation policy planning and implementation that differ substantially from those obtainable from a single marginal or average valuation of commutation time. The initial analyses involving value of time were simplistic. Chiefly aimed at measuring the benefits of highway investment programs, these studies calculated travel time savings by valuing time at 100% of the wage rate, or some variant of it, on the assumption that the time was worth that much to the consumer if he could have used it at work.' In later work on the valuation of travel time and the demand for urban transportation, explicit reference was made to the utility-affecting nature of time spent travelling [3; 4; 5; 18; 34; 35]. The resultant estimates have diverged widely, ranging from 9.4% of the wage rate [35] for auto travel, to 42% for commutation [18], with even higher figures-more than 100% of the wage rate-derived from Blackburn's work on inter-city air travel demand [4]. The model specifications and estimation procedures differed as widely as the results.