The Valuation of Travel Time Savings for Urban Car Drivers: Evaluating Alternative Model Specifications

Abstract

The empirical valuation of travel time savings is a derivative of the ratio of parameter estimates in a discrete choice model. The most common formulation (multinomial logit) imposes strong restrictions on the profile of the unobserved influences on choice as represented by the random component of a preference function. As we progress our ability to relax the restrictions we open up opportunities to benchmark the values derived from simple (albeit relatively restrictive) models. In this paper we contrast the values of travel time savings derived from five discrete choice models – multinomial logit, heteroskedastic extreme value, covariance heterogeneity logit, mixed (or random parameter) logit and multinomial probit. The empirical setting is urban car commuting and non-commuting in six locations in New Zealand. The evidence supports the growing position that less restrictive choice model specifications tend to produce higher estimates of values of time savings compared to the multinomial logit model; however the degree of under-estimation of multinomial logit remains quite variable, depending on the context.