Value of Travel Time: To Differentiate or Not to Differentiate?

Abstract

The value of travel time (VTT) is one of the most crucial concepts in transport infrastructure appraisal, given that travel time typically accounts for 60% to 80% of the monetized benefit of new transport infrastructure when formal cost–benefit analysis (CBA) is undertaken. VTT can be differentiated in many dimensions (e.g., travel purpose, travel mode). This study scrutinized the extent to which VTT was differentiated or not differentiated for empirical–theoretical, political–philosophical, or practical reasons in the appraisal practices of the United Kingdom, Norway, Sweden, the Netherlands, and Denmark. Each country’s appraisal guidelines were analyzed, and 32 experts in CBA were interviewed. It was found that the five countries made different decisions on differentiation of VTT with respect to the dimensions of mode, journey length, and trip purpose. Moreover, it was found that the VTT was not segmented between regions in the five countries. The appraisal guidelines in the countries underpinned this decision with the argument that politicians would reject CBA if the VTT varied between regions, and most of the experts consulted in this study endorsed this view. Empirical evidence in the literature was scant, however, either to support or contest the argument that politicians would not accept regional differentiation. Thus 19 Dutch politicians were asked to reflect on the desirability of a VTT differentiated by region. It was found that most politicians supported this differentiation. Politicians, among others, stated that the purity and impartiality of CBA should be safeguarded. This result called into question the assumption articulated in the guidelines that politicians would reject CBA if the VTT were differentiated between regions.