Identifying the Value of Travel Time Distribution – Evidence from the Swedish Value of Time Study 2008

This paper will discuss the two main problems associated with estimation of the mean and distribution of the value of travel time (VTT). One is that the range of the bids should be extended over the support of the VTT distribution. The other one is that the mean may be very sensitive to parametric assumptions on the form of the distribution. Based on experience from the Danish value of time study, the Swedish 2008 value of time study was designed to better capture the expected VTT distribution by extending the bid range. Another innovation was to ask respondents about their maximum willingness to pay for a certain time gain. This gave a means to identify a suitable truncation point. The main finding in this paper is that extending the bids enabled for the observation to the whole VTT distribution, leaving much less uncertainty as to the form of the VTT distribution. The 2008 Swedish VTT study has drawn on the findings from the Danish VTT study. This paper reports on the findings of the Swedish VTT study with regards to model specification and estimation. Although the study comprises not only car but also the bus and train modes, the authors limit the analysis to the car mode in this paper. A key issue is that in order to estimate the mean and other moments of the VTT distribution, the entire distribution needs to be observed. In other words, the range of the bids should be extended over the support of the VTT distribution such that the estimated VTT is bounded by the data. If not, then only a part of the distribution is observed so that the moments of the VVT distribution cannot be estimated without further assumptions. In the Danish case, 13 percent of the observations did not reject the highest bid offered. This is one of reasons why the estimated mean VTT was found to be so sensitive to the assumption about the distributional form. Analyzing the choices made in the present study, it turns out that there are only 15 out of 1,317 drivers who rejected all bids. At the outset of the study, it was feared that although the bid range was extended, a significant share of respondents would still accept all bids as an experimental artifact and thereby just push the unobserved part of the VTT distribution further away. The result presented in this paper is assuring and shows that respondents behavior is consistent with the theory. It seems that the gap between the bid range and the VTT distribution endpoint is practically closed.