Value of Time

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The “value of time” according to transport economics refers to the opportunity cost of the time that voyager spend on their journey. In other words, it is the amount that a traveler would be willing to pay in order to save time, or the amount they would accept as compensation for lost time. It’s a known fact that one of the main reasons behind the transport improvements is the amount of time that travelers can save. Using a set of values of time, the economic benefits of a transport project can be quantified to compare with the costs (which form the basis of cost-benefit analysis) (Ben-Akiva and Lerman, 1985). Values of time consist of the calculation of the non-monetary costs incurred as part of a journey, so that the generalized cost of the journey (a combination of both monetary and non-monetary costs) can be calculated.

Although the value of time is an entity which depends upon the purpose of the journey, but can generally is divided into two sets of valuations: working time and non-working time (wiki). Working time is subject to the forces of the labor market, and so can be valued in a relatively straightforward manner. The value of working time is the opportunity cost of that time to the employer, which is generally equivalent to the salary of the worker. For example, if a worker is on a salary of £15 per hour travels to a meeting, the value of time in that case is £15 per hour, because that is the amount the employer would be willing to pay to reduce travel time (as travel time can be considered to be "wasted", i.e. not spent working). According to the UK Department for Transport, calculation is done for the average values of time for travel on various modes of transport so that these values can be used to appraise transport projects. The non-working time is calculated the time spent outside work, which might include journeys to and from work and leisure journeys. Since this time is not valued in a market, it can only be estimated from revealed preference or stated preference analysis techniques, where the real or hypothetical choices of travelers between faster, more expensive modes and slower, cheaper modes can be examined.

Since last 25-30 years, discrete choice models have played an important role in transportation demand analysis .They are generally used to provide a detailed representation of the complex aspects of transportation demand, based on strong theoretical justifications. The discrete choice models are powerful but complex in nature. The art of finding the appropriate model for a particular application requires both a close familiarity with the reality under interest and a strong understanding of the methodological and theoretical background of the model (M. Bierlaire and Y. Vandevyvere. HieLoW, 1995). These models consider that the demand is the result of several decisions of each individual in the population under consideration. These decisions generally consist of a choice made among a finite set of alternatives. An example of sequence of choices in the context of transportation demand is described in Figure 1: choice of an activity (play-yard), choice of destination (6th street), choice of departure time (early), choice of transportation mode (bike) and choice of itinerary (local streets).

Figure 1: A sequence of choices

A model, as a simplified description of the reality, is able to provide a better understanding of complex systems. Apart from that, it allows for obtaining prediction of future states of the considered system, controlling or influencing its behavior and optimizing its performances. The complex system under consideration here is a specific aspect of human behavior devoted to some choice decisions. The complexity of this ``system'' clearly requires many simplifying assumptions in order to obtain operational models. Some of the assumptions about different entities can be as described below:

Decision maker

The decision-maker is generally assumed here to be...
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