The Value of Time
The problem of the evaluation of intangible benefits, which is a common difficulty in applying the techniques of cost-benefit analysis, is of particular importance in transport economics. Any new transport investment in a developed country will normally result in the provision of quicker, rather than of entirely new, transport facilities. The major ‘output’ of most transport investments will thus be a saving in time (for men, vehicles or goods). In some cases, such as with the introduction of a fast new electric rail service, it may be possible to find out how much money people will pay in order to reduce their journey times. But for investment in roads and other forms of transport infrastructure where the ‘product’ is not sold directly to consumers, it is necessary to put some value on time savings if any estimates of rates of return are to be made. A recent calculation of the costs and benefits expected to result from a proposed urban road construction and improvement scheme (the Granby Halls project in Leicester) was based on estimates of three main factors: net reductions in journey times, reductions in accident rates and increases in road maintenance costs.
KeywordsJourney Time Leisure Time Marginal Utility Time Saving Hourly Wage Rate
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