The income elasticity of the value of travel time is not one number

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Mogens Fosgerau
Staffan Algers

This paper provides new evidence on the evolution of the value of travel time (VTT) over time and its relation to income based on two essentially identical Stated Choice experiments conducted at an interval of 13 years. The results indicate that the income elasticity of the VTT is not uniform over income but increasing in income. As a consequence, the average rate at which the VTT increases with income in the cross-sectional samples has itself increased between the two survey years and can be expected to increase further over time. The estimation results support the idea that the income elasticity of the value of time has remained constant at each real income level. This confirms that it is not so much the relationship between income and the value of travel time that has changed over time as it is the level and distribution of income in the samples that has changed.

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