Quantifying welfare loss due to longer commute times in Seoul: A two-stage hedonic price approach

Abstract

The relationship between commute duration and commuter well-being is an essential component of transport policy evaluation and planning, but few studies have considered it. This study evaluates the degree of capitalization of commute time in the housing market and measures the welfare loss caused by longer commute times using the Seoul metropolitan area (SMA) in Korea as a case study. We estimate a demand function between the observed commute time and its implicit price and evaluate the welfare loss for the average increase in commute time in the SMA between 1995 and 2010. The empirical findings show that the documented 12.5% increase in commute time caused a welfare loss of $1.3 billion for employees in the SMA. This evidence clearly links longer commute times with declining commuter well-being.