Value-of-time through a financial crisis: temporal and inter-temporal variation

Abstract

Traditionally, the forecasting of the value-of-time assumes proportionality to income. This way of forecasting the value-of-time considers only the “cost-side” and assumes that travel time preferences are unchanged. However, there are numerous reasons why time preferences could change over times among which, autonomy, increased comfort and flexible communication via mobile broadband solutions, could be examples. In this paper we look into the dynamics of the value-of-time by estimating the value-of-time in a pooled cross-section model. Data originates from a large-scale Danish travel survey from 2006 to 2017 with more than 150.000 individuals and almost 500.000 trips. The period is interesting from a research perspective as it offers substantial variation in income and travel cost and at the same time represent a phasing-in period for mobile-broadband solutions from almost no coverage to full national coverage. We show that the inter-temporal increase in the value-of-time across the period agrees well with the increase in the disposal income and has elasticity close to unity, whereas the correlation to GDP is relative poor. Secondly, we show that the intra-temporal variation across income segments is stable across years and has an elasticity, which is approximately 0.5. Results are followed by an intensive Booth Strapping exercise from which, value-of-time variation across years and income groups are presented.