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Transportation Research Procedia 17 (2016) 116 – 123

11th Transportation Planning and Implementation Methodologies for Developing Countries,

TPMDC 2014, 10-12 December 2014, Mumbai, India

Estimation of Value of Travel Time for Work Trips

Athira I Ca, Muneera C Pb, Krishnamurthy Kc, Anjaneyulu M V L Rd*
aM.Tech student, Department of Civil Engineering, National Institute of Technology-Calicut, 673601, Kerala, India.
bResearch scholar , Department of Civil Engineering, National Institute of Technology-Calicut, 673601, Kerala, India.
c
Assosciate Professor, Department of Civil Engineering, National Institute of Technology-Calicut, 673601, Kerala, India. d
Professor, Department of Civil Engineering, National Institute of Technology-Calicut, 673601, Kerala, India.

Abstract

Value of travel time (VOT) is one of the key inputs to travel demand models and is important for management and appraisal of
transport investment decisions. The value of travel time can be defined as the price people are willing to pay to acquire an additional unit
of time. Value of travel time has most often been determined by estimating mode choice models and evaluating marginal rate of
substitution between the cost and travel time of the alternative modes. This study is aimed to find out the value of travel time associated
with work trips of travellers within Calicut city. It refers to the concept of willingness to pay for reduction of travel time. Data were
collected by means of combined revealed - stated preference survey on representative sample of population
in Calicut city by work place interview. Stated preference experiment was designed to capture the responses for estimating VOT
values for work trips. Responses in the form of “choice” among the presented choice alternatives were utilized to develop utility
models and the estimated coefficients from the developed models were used to estimate VOT measures. The results indicate that
the VOT associated with work trips is higher in high income groups. As income increases VOT also increases. Similarly, trip
length also has a positive influence on VOT. As trip length increases, VOT increases. Within the same trip length itself, VOT
varies among different income groups.
© 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license © 2015 The
Authors.Published by Elsevier B.V.
(http://creativecommons.org/licenses/by-nc-nd/4.0/).

Selection and peer-review under responsibility of the Department of Civil Engineering, Indian Institute of Technology Bombay.
Peer-review under responsibility of the Department of Civil Engineering, Indian Institute of Technology Bombay
Keywords: value of travel time;revealed preference; stated preference;binary logit model

1. Introduction
Transportation system is very important part of any modern economy and core component of daily human life.

* Corresponding author. Tel.: 09961059172

E-mail address:athirachandran899@gmail.com

2352-1465 © 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND
license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the Department of Civil Engineering, Indian Institute of Technology
Bombay doi:10.1016/j.trpro.2016.11.067
 I.C. Athira et al. / Transportation Research Procedia 17 (2016) 116 – 123 117

Efficient transport systems offer better accessibility to markets, employment and additional investments. Travel time is
an important attribute of any transportation system. It is a significant factor that shapes the decisions of travellers in the
transportation market. Travel time savings are found to be the greatest benefit of transport projects such as
highway and public transport improvements and one of the major intangibles in transport cost-benefit analysis. Value of
travel time plays a key role in traveller’s mode choice behaviour and varies significantly with varying socio-
economic conditions.
The concept of value of travel time (VOT) was first introduced in 1960’s after the development of time allocation
model. According to time allocation model, consumer allocates his/her time and cost to several activities by
maximizing his/her utility under time and budget constraints. Value of travel time was first used in economic evaluation
by the Commonwealth Bureau of Roads in 1972. In 1987, the UK firm MVA Consultancy undertook an extensive
review of theory and empirical evidence related to VOT.
Value of travel time can be defined as the price people are willing to pay to acquire an additional unit of time,
while the value of time saving (VTS) can be defined as the willingness to pay for time reallocation between two
alternative activities (Huq, 2007). When evaluating consumers’ choices between different transportation alternatives,
the value of time is a fundamental concept. The value of time is calculated as a trade-off ratio between the time
coefficient and the cost coefficient. VOT depends on several parameters and varies from country to country, industry to
industry, and even from individual to individual.
Travel time savings are main benefit out-turn from investments in transport infrastructure and service development.
In developed countries it can account for as much as 80% of overall benefits. Transport investment appraisals quantify
travel time saving benefits using standard unit values provided by an appropriate transport/highway agency. In the case
of non-availability of such unit values, travel time savings are estimated using an established national practice. But, in
developing countries like India, the practice is limited. This is because there is a lack of empirical evidence to support
the use of conventional models of value of travel time where work patterns are so diverse. Without reliable methods to
value travel time, economists still continue to use vehicle operating costs as way to assess investments. In developed
countries, the working time savings are valued based on the wage rate (i.e. wage rate plus extra costs incurred such as
taxes, compulsory contributions etc.), and the non-working time savings are valued based on the willingness to pay for
travel time saved in order to transfer those time savings to leisure activities.

The study is conducted to fulfil following objectives; i) identify an appropriate methodology for estimating the
value of travel time based on extended literature review, ii) estimate user’s value of travel time for work trips and iii)
study the effect of socio-economic variables on value of travel time.
In the present study, VOT values are estimated for different income groups as well as different trip lengths. The
work is limited to estimate the value of travel time in the context of travel to work of people during morning period in
Calicut city.
2. Literature review
Several research works have been done on both the theory and practice of valuing travel time. The formalized
theory of time allocation and how time is valued is often referenced to Becker (1965). Different researchers employed
different approaches for estimating the value of travel time. Beesley (1965) and Cesario (1976) estimated the value of
time saved in commuting to work as a function of wage rate. Raghavachari and Khanna (1976) used home interview
data in Ahmadabad and developed disaggregated models incorporating mode choice and trip frequency choice. Using
these models, they derived value of travel time in rupees per hour. Fezzi et al (2012) estimated the value of travel time
specific for recreation trips by revealed preference approach.
The national value of time studies conducted in many countries (UK, Sweden, Finland, France etc.) considered the
experimental data collection methods such as stated preference, along with results based on conventional revealed
preference method. Wardman (1987) conducted an empirical study using stated preference data to determine the
distribution of individual values of time. Ahsen et al (2002), Richardson (2004) Antoniou et al (2007), Tseng and
Verhoef (2008) and Xumei et al (2011) also employed stated preference approach for estimating VOT.
For estimating VOT, different models were developed. Many researchers employed multinomial logit model
118 I.C. Athira et al. / Transportation Research Procedia 17 (2016) 116 – 123

(Ahmeda and Vaidyab, 2004; Blayac, 2007; Hensher, 2006;Tikoudis, 2008 and Tseng and Verhoef, 2008) and mixed
logit model (Algers, 1994; Brownstone et al, 2002; Fezzi et al, 2012; Tikoudis, 2008; and Tseng and Verhoef, 2008 ) to
estimate the value of travel time. Binary Logit model is chosen as the basic model in this paper and VOT for different
income groups and different trip length are determined.
3. Theoretical framework
Value of travel time can be defined as the maximum amount of money that people are willing to sacrifice to save
one unit of time, provided that all other trip related attributes remain constant. In simple linear models, the VOT is
calculated as the ratio of parameter estimates related to travel time and travel cost, holding all else constant. In
calculating VOT, it is important that both attributes (i.e., travel time and travel cost) to be used in the calculation are
found to be statically significant, otherwise no meaningful VOT can be calculated.
Stated Preference (SP) data with the decision maker facing two alternatives in each choice situation was used.
The alternatives differ on following attributes:
x Travel time TT [in minutes]
x Travel cost TC [in rupees]
The utility function of the alternative has the form

ൌ ௧௧௧ (1)
where ௧௧ and ௧ represent respective parameter that are going to be estimated from data.
Parameters ௧௧ and ௧ were estimated by maximum likelihood method using statistical analysis software. The
value of travel time was obtained by the substitution of estimated values of ௧௧ and ௧ in the formula
௧
Rs/hr (2)

4. Data collectionൌ௧ൌ
In order to estimate the value of travel time associated with work trips, extensive amount of data is required. Since
the study requires investigating the willingness to pay for reduction in travel time of trip makers, it is necessary to
interview them to obtain first hand information. Workplace interview survey method was adopted for collecting
information on household, personal and travel particulars (details of trips from home to work place) in the context of
work trips of employees. Only work trips were considered because it is a common, regular trip for many people and
seems to be the most susceptible to encouragements to change the mode use. In addition to travel data, respondents
were asked to state their choice against each of the given choice sets.
Design of questionnaire is an important step in conducting RP-SP survey. The questionnaire consisted of three
parts. The first part is meant to collect the socio-economic details of the individual. The second part is meant to collect
the recent travel details on a normal day and third part is meant to collect the stated preference from the given choice
set. The quantitative attributes such as travel time and travel cost were considered for the preparation of alternatives. A
major consideration in selecting attribute levels is the range and degree of variation. Three levels were considered for
each attribute. The range and degree of variation in travel time and travel cost existing in Calicut city were arrived
based on data obtained after conducting RP survey on the representative sample of population. Attributes and the
corresponding levels used in the experiment are given in Table 1.
Table 1: Attributes and levels

Attributes Level 1 Level 2 Level 3

Travel time Reduced by 15% Reduced by 25% Reduced by 35%
Travel cost Increased by 20% Increased by 40% Increased by 80%

Full factorial orthogonal main effects only design using statistical analysis software generated 9 alternatives using
all attributes and levels. Of these, 7 alternatives were selected for preparing SP choice set. One extreme alternative with
high travel time and travel cost and one dominant alternative with low travel time and travel cost were removed. Each
respondent of the survey was provided with seven choice sets, each choice set with two alternatives, one base
 I.C. Athira et al. / Transportation Research Procedia 17 (2016) 116 – 123 119

alternative (current alternative) and a change from this alternative (a new alternative). A sample of SP choice set is
presented in Table 2.
Table 2. A Sample choice set

Attribute Presently used mode Alternative 1

Travel time in minutes TT1 0.75TT1

Travel cost in rupees TC1 1.4TC1

During the study, 890 respondents were approached to participate in the survey, and each respondent was requested
to provide information related to socio-economic characteristics, most recent trips on a normal working day and then to
choose an alternative from each of the seven choice sets in the context of work trips.
Summary statistics of the socio-economic characteristics and trip characteristics are given in Table 3.
Table 3. Summary statistics of socio-economic characteristics and trip characteristics
Variable Percentage

Male 64%
Gender
Female 36%

Married 80%
Marital status Unmarried 17%
Others 3%
<18 0%
18-25 11%
Age, years 25-45 55%
45-60 32%
>60 2%
<=10000 25%
10000-20000 26%
20000-30000 24%
Personal monthly income (Rs) 30000-50000 18%
50000-75000 6%
75000-100000 2%
>100000 0%

Government employed 58%

Occupation
Private employed 42%
Walk 2%
Two wheeler 30%
Bus 57%
Mode of travel
Car 7%
Auto rickshaw 2%
Train 3%
<10 53%
10-20 23%
20-30 13%
Trip length (km)
30-40 4%
40-50 4%
>50 3%

The preliminary analysis revealed that out of the 890 respondents, 64% are males and 36% are females. Modal split
showed that 57% of surveyed people choose bus and 30% choose two-wheeler for work trips. It is observed that 53% of
work trips are within 10 km distance.
5. Value of travel time
Binary logit models were formulated using household variables, personal variables and travel variables. Final
specification of the model was arrived based on a systematic process of eliminating variables found to be statistically
insignificant. Evidences from many studies suggest that income has a significant effect on the value of travel time.
120 I.C. Athira et al. / Transportation Research Procedia 17 (2016) 116 – 123

For this reason, models were calibrated separately for different income groups so that variation of VOT with income
can be clearly understood. The income groups considered for this analysis are as follows: less than 10,000 Rs/month,
10,000-20,000 Rs/month, 20,000-30,000 Rs/month and 30,000-50,000 Rs/month. The coefficient estimates for different
income groups using binary logit models and VOT values are given in Table 4.
Table 4 VOT based on personal monthly income

<10,000 10,000-20,000 20,000-30,000 30,000-50,000

Variables Coefficient t-statistic Coefficient t-statistic Coefficient t-statistic Coefficient t-statistic

Travel time -0.106 -9.397 -0.134 -13.009 -0.148 -9.754 -0.173 -16.314
Travel
Variables
Travel cost -0.178 -6.677 -0.168 -9.259 -0.104 -5.647 -0.073 -9.138

Gender - - 0.258 1.798 0.348 1.800 - -

Age 0.048 5.350 0.028 4.671 0.023 3.437 0.156 2.228

Personal
Variables Marital
1.119 4.465 0.669 3.919 - - 0.801 3.970
status

Occupation 0.195 3.407 0.448 9.145 0.445 6.439 0.266 4.759

Household
0.207 2.631 - - - - 0.105 2.353
size
No. of
Household
employed -0.633 -4.225 -0.415 -4.233 -0.789 -4.955 - -
variables
persons
Vehicle
- - -0.196 -2.310 -0.426 -3.723 -0.424 -6.584
ownership

pseudo R2 0.205 0.234 0.224 0.214

adjusted R2 0.200 0.229 0.216 0.209

VOT (Rs/hr) 35.73 48.00 85.38 142.19

VOT/ Average hourly

95.28% 64% 68.30% 71.09%
income

Travel time, travel cost and occupation are most significant variable in all the models. The negative coefficient for
travel time and travel cost indicate the decreased utility associated with increased travel time and travel cost. The sign
of socio-economic variables are also as expected. Age, marital status and occupation have positive utility to presently
used alternative. More family responsibilities of married people force them to choose the new fast alternative even
though it is more expensive. Safety concerns about the new alternative results the aged persons to stick on to the present
mode. Higher level employees are willing to shift to new fast and expensive alternative compared to lower level
employees. This is logical because, responsibilities regarding work handled by higher level employees are more than
that of lower level employees.
Variation in VOT of different income groups are as expected. VOT increases with increase in income. VOT
variation is between 35.73 Rs/hr and 142.19 Rs/hr for income group <10,000 Rs/month and 30,000-50,000 Rs/month.
The pseudo R2 and the adjusted R2 values of all the models lie between 0.2 and 0.25. This represents an acceptable
model fit.
Trip length can govern an individual’s choice of a particular alternative. Several studies have investigated the
 I.C. Athira et al. / Transportation Research Procedia 17 (2016) 116 – 123 121

effect of trip distance on VOT and found a positive link between VOT and distance. Distance groups considered for the
analysis are as follows: 0-5 km, 5-10 km, 10-20 km, 20-30 km, 30-40 km, 40-50 km etc. Values of travel time for
different trip length are given in Table 5.
Table 5: VOT based on trip length

Variables 0-5 km 5-10 km 10-20 km 20-30 km 30-40 km 40-50 km

t t t t t t
coeffi coeffi coeffi coeffi coeffi coeffi
statisti statisti statisti statisti statisti statisti
cient cient cient cient cient cient
cs c c c c c
Travel variables

Travel - -
-4.324 -0.255 -0.079 -6.005 -0.087 -6.097 -0.203 -6.147 -0.210 -3.973
time 0.524 10.419

Travel -
-3.118 -0.278 -9.972 -0.065 -7.814 -0.055 -5.718 -0.093 -3.844 -0.078 -2.591
cost 0.835

Gender 1.907 2.124 0.336 2.017 0.732 4.760 - - - - -9.299 -3.981

var iab l

Marital
es

Age 0.052 1.448 0.034 4.473 0.469 6.000 0.031 3.296 - - 0.659 4.202
Personal

1.950 2.952 1.161 4.887 0.376 2.261 0.727 3.262 1.340 2.138 17.864 3.734
status
Personal - - -
-1.076 -0.613 -7.719 -1.144 -0.728 -7.070 -0.879 -3.061 -3.593
income 0.419 12.540 13.345
Occupati
2.111 3.980 0.553 10.320 0.299 6.623 0.224 4.149 0.608 3.980 -6.052 -3.558
on
Househol
- - 0.169 2.852 0.249 4.410 - - - - 7.125 3.552
variabl

d size
employed -3.942 - - -0.357 -3.074
es

No. of -
- - -0.579 -2.093 - -
House
hold

4.011
persons 1.454

Vehicle
-
ownershi -2.290 -0.426 -4.507 -0.194 -2.340 - - - - -1.264 -1.949
p

pseudo R2 0.481 0.331 0.324 0.206 0.361 0.678

adjusted R2 0.477 0.327 0.319 0.196 0.338 0.659

VOT
37.65 55.04 72.92 94.91 130.96 161.54
(Rs/hr)

VOT/ Average
31.76% 44.87% 62.26% 81.53% 101.33% 121.09%
hourly income

Travel time, travel cost, personal income and occupation are most significant variables in all the models. But
significance of personal income and occupation is reduced for trip distance of 30-40 km and 40-50 km. Since travel
time and travel cost are significant, meaningful WTP can be estimated. Personal income, number of employed persons
and vehicle ownership has negative utility towards presently used alternative. Gender, age, marital status, occupation
and household size have positive utility to presently used alternative.
Value of travel time associated with travel increases when trip distance increases. VOT as a function of average
122 I.C. Athira et al. / Transportation Research Procedia 17 (2016) 116 – 123

hourly income varies between 31% and 121%. The pseudo R2 and the adjusted R2 value of the model developed for
distance 20-30 km is close to 0.2. For all other models, pseudo R2 and adjusted R2 is high and indicating better model
predictability. For distance range of 40-50 km adjusted R2 is very high (0.659).
Within the same trip length itself, there is variation in VOT for different income groups. Table 6 gives the VOT
based on trip length-income. When distance increases, variations of VOT among different income groups become
larger.
Table 6: VOT based on trip length and income

Distance (km) 5-10 10-20 20-30

10,000 20,000 10,000 20,000 10,000 20,000

Income (Rs/month) <10,000 to to <10,000 to to <10,000 to to
20,000 30,000 20,000 30,000 20,000 30,000

VOT (Rs/hr) 48.74 55.65 63.15 56.76 61.79 76.77 62.86 78.86 112.11

VOT/Average hourly
129.97% 74.20% 50.52% 151.36% 82.38% 61.42% 167.62% 105.15% 89.68%
income

6. Conclusions
This paper presented the estimation of value of travel time in case of work trips using combined RP-SP approach.
The study revealed that the income and trip length have substantial influence on value of travel time. As income
increases, VOT also increases. Similarly, trip length also has a positive influence on VOT. Within the same trip length
itself, there is variation in VOT among different income groups. Similar studies can be carried out to analyse the
influence of socio-economic characteristics on value of travel time for different trip purposes.

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