Scope and Limits of Value of Time Estimations in Cost Benefit Analysis
David MEUNIER, Université Paris-Est, LVMT, UMR_T9403, Emile QUINET, Paris School of Economics-Ecole Des Ponts ParisTech
A new set of VOTs issued in France is presented and compared with a few other national guidelines, discussing the differentiation issue and the main consistency issues between traffic modelling and surplus calculation, and how best to combine them.
Value of time is a major parameter in transport economics, and many studies have been devoted both to its theoretical foundation and empirical estimation, and to its use in traffic modelling and Cost Benefit Analysis. Among many other studies on this subject, a recent one has being commissioned by the French Government in the framework of a general review of CBA practices. The output of this study is first an update of previous values, using a set of studies based both on revealed and declared preferences, which show interesting evolution features, and especially a decrease relatively to the previous values set about ten years ago. The degree of differentiation of these VOTs is increased. Another output is related to the use of these values in traffic modelling and CBA and more generally to the links between traffic modelling and CBA. They are studied at two levels: first, while most usually implemented traffic models are in practice not designed in accordance with economic theory (as a whole, demand functions are not derived from a utility function), how to reckon a user’s surplus consistent with the traffic model; second what is the pertinence of mandatory values of time, a procedure which is commonly in use in most countries? For instance how should these mandatory values be used, and what to do when they are very different from values revealed by the model?
The communication will first achieve a short presentation of the abovementioned report and the recommended VOTs. It will discuss the differentiation issue and give comparative elements with a few other national guidelines. Then, it will present the main issues of consistency between traffic modelling and surplus calculation through practical examples, and finally make recommendations on how to deal with mandatory VOT and how to combine those mandatory values and traffic modelling results.
Association for European Transport