Income-contingent user preferences in policy evaluation: application and discussion based on multi-agent transport simulations

Abstract

Standard economic policy evaluation allows the realization of projects if the aggregated economic benefit outweighs their costs. The use of one single aggregated welfare measure for evaluating and ranking projects has often been criticized for many reasons. A major issue is that differentiated effects on individuals or subgroups of the population are not taken into consideration. This leads to the need for transport planning tools that provide additional information for politicians and decision makers. The microscopic multi-agent simulation approach presented in this paper is capable of helping to design better solutions in such situations. In particular, it is shown that the inclusion of individual income in utility calculations allows a better understanding of problems linked to public acceptance. First, individual income-contingent utility functions are estimated based on survey data in order to describe human mobility behavior. Subsequently, using the MATSim framework, the implementation is tested in a test scenario. Furthermore, and going beyond Franklin (2006), it is shown that the approach works in a large-scale real world example. Based on a hypothetical speed increase of public transit, effects on the welfare distribution of the population are discussed. It is shown that the identification of winners and losers seems to be quite robust. However, results indicate that a conversion or aggregation of individual utility changes for welfare analysis is highly dependent on the functional form of the utility functions as well as on the choice of the aggregation procedure.