The value of travel time

The value of a particular driver's travel time largely dictates his or her travel decisions, with factors such as availability of travel options and ability to pay also influencing those decisions. The value of travel time for a particular person varies significantly based on any number of factors, such as:

• The purpose and type of trip (e.g., commuting, recreational, or business related).
• The characteristics of the traveler (e.g., income).
• The transportation mode (e.g., bus, car, or walk).
• Travel conditions (e.g., poor weather or the presence of congestion).
• The time of the year, week, or day (e.g., going home at the end of the day versus going to work in the morning).
• The location (intercity/interstate versus local trips).

The value of travel time might also be different for two commercial vehicles sitting next to each other on the freeway if one is scheduled to make a delivery within the hour and the other is just beginning a long, multi-state trip.

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The value of travel time is an important factor in many of the decisions made by travelers in terms of the modes they use, the routes they take, and the times they travel. Transportation planners, engineers, and economists, therefore, try to estimate travelers' value of travel time savings (VOT). VOT is the equivalent amount of money a traveler would pay to reduce the amount of time to complete a trip.VOT allows for the measurement of benefits derived from transportation projects that reduce congestion and travel time.

Providing improved travel time and travel time reliability is generally among the largest societal benefits from transportation infrastructure projects. Accurate estimates of traveler VOT help quantify the potential value of those benefits relative to the required monetary investment.VOT and VOR are essential for the state to conduct cost/benefit analyses for transportation infrastructure investment.

VOT has been used in the transportation sector for decades. The first analysis of VOT was a 1925 Bureau of Public Roads report, which estimated VOT to be $3 per hour in 1925 dollars (1). If adjusted for inflation to 2015 dollars, that would be a VOT of approximately $41 per hour. Early estimates of VOT were calculated in one of two ways:

• Assume VOT is equal to the traveler's wage rate.
• Estimate how much travelers would be willing to pay to use a faster mode of travel. For example, one might ask a traveler how much he or she would be willing to pay to travel by car rather than by bus.

New technologies and new data sources may allow transportation professionals to use revealed-preference (RP) methods that identify actual (rather than stated) preferences. These RP methods tend to rely on actual consumer behavior data as opposed to having travelers self-select their preferences from among various predetermined scenarios. The analysis of value of time is valuable for at least three reasons. First, it is important in decision making about transportation policy, as just mentioned. Second, it sheds light on broader questions about human behavior that are of interest throughout economics. Third, it is a crucial component in travel demand modeling, which is needed for many purposes.

Two of the most prominent goals of transportation investments are time savings and, to a lesser extent, improvements in the reliability (i.e. predictability) of travel time. Insofar as it is possible to quantify "typical" costs of travel, travel time and its unreliability tend to dominate. Several factors influence the value of time travel length, transport mode, time period, trip purpose, and environmental conditions. The value of reducing travel time expresses three principles. First, time saved from travel could be dedicated to production, yielding a monetary benefit to either travelers or their employers. Second, it could be spent in recreation or other enjoyable or necessary activities for which individuals are willing to pay. Third, the conditions of travel during part or all of a trip may be unpleasant and involve tension, fatigue, or discomfort. Reducing the time spent while exposed to such conditions may be more valuable than saving time on more comfortable portions of the trip. These principles underlie the distinctions among values recommended in this guidance.