Accounting for user type and mode effects on the value of travel time savings in project appraisal: Opportunities and challenges
Journal article, Peer reviewed
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Original versionResearch in Transportation Economics. 2014, 47 (November), 50-60. 10.1016/j.retrec.2014.09.018
Differences in Value of Travel Time Savings (VTTS) between travel modes can play a decisive role in the ranking of projects that affect the travel time of different travel modes. Conceptually, between-mode differences in VTTS can be decomposed into the user type effect (UE) that accounts for differences in characteristics of user groups (e.g. income differences) and the mode effect (ME) that accounts for differences in travel modes (e.g. the comfort level). Several studies have disentangled and quantified these two effects. However, their potential use for project appraisal has not been thoroughly discussed in the literature. Two opportunities of using information about ME and UE in appraisal are discussed: (i) Removing the UE from national mode-specific VTTS in order to obtain a set of VTTS that only differs by the comfort level of the modes (ii) Provide the VTTS in travel modes taking into account user type effects of travellers that switch modes after project implementation. The former arguably improves on the equity approach in project appraisal under the normative argument of valuing individual's time saving equally. The latter can improve the overall precision of user benefit representation in project appraisal compared to the standard mode-specific approach, where mode switchers are assumed to have the same VTTS in the new mode independent of which original user group they belong to.