Do Individuals Have Different Preferences As Consumer and Citizen? the Trade-off Between Travel Time and Safety
Niek Mouter, Delft University of Technology, Sander Van Cranenburgh, Delft University of Technology, Bert Van Wee, Delft University of Technology
This study finds that individuals have different preferences as consumer than as citizen by conducting a Stated Choice experiment. As citizen people assign relatively more value to safety compared to travel time than in their role of consumer
Transport policy decisions often involve a trade-off between travel time and safety. Transport economists generally evaluate the societal value of transport policy options involving travel time versus safety trade-offs in a Cost-Benefit Analysis (CBA) through multiplying the expected change in traffic casualties with the value of a statistical life (VOSL) and multiplying the changes in travel time with the value of time (VOT). The dominant empirical approach to infer the VOSL and the VOT is based on stated preference experiments in which respondents are asked to make choices between (hypothetical) routes which differ in terms of various characteristics (e.g. travel time and safety).
Inferring the VOT and the VOSL from the amount of money individuals are willing to pay from their after tax income – and establishing the societal welfare effect of policy options through aggregating changes in travel time and safety with these money metrics – has been heavily criticized by numerous economic-philosophers. These scholars contest the implicit assumption in CBA that the utility individuals derive from both consumption goods and effects of government projects can be measured through the amount of money they are willing to pay from their after tax income in (hypothetical) markets. They argue that respondents participating in experiments for inferring the VOT and the VOSL are asked to trade-off after tax income, travel time and safety in their role as consumer of mobility, whilst preferences of individuals in their role as consumers may be a poor proxy for how the same individuals in their role as citizens believe that Government should trade-off tax money, safety and travel time.
Our study tests whether individuals indeed do have different preferences as consumer and citizen when trading off travel time and safety, by conducting Stated Choice experiments in which one group of respondents is asked to choose between hypothetical routes as consumer and another group of respondents is asked to choose between hypothetical routes as citizen. We find that individuals indeed have different preferences as consumer than as citizen. As citizen people assign relatively more value to safety compared to travel time than in their role of consumer.
When individuals are put in a consumer role in which they have to make a choice between two routes which differ in travel time and safety their marginal rate of substitution between reduction of traffic casualties on a road and a reduction of travel time is around 2.6 minutes travel time savings per a reduction of 1 traffic casualty per year. When individuals are put in a citizen role in which they are asked to recommend one route to the government considering that the government needs to choose between two route options for a new road, their marginal rate of substitution between reduction of traffic casualties on a road and a reduction of travel time is 16.3 minutes of travel time savings for 80,000 trips per day per a reduction of 1 traffic casualty on the road per year.
Our results question the appropriateness of assessing projects that are financed from (expected) taxes using a CBA which is based on metrics like the VOT and the VOSL. The most important policy implication of a shift from evaluating transport projects using consumer preferences to evaluating projects using citizen preferences would be that projects which improve safety are likely to be relatively more attractive from a societal point of view when compared to projects generating travel time savings.
To illustrate the interpretation of our results, consider a government which needs to decide between two route options being Route A: 30 minutes and 2 traffic casualties per year and Route B: 34 minutes and 1 traffic casualty per year. Both routes will carry 80,000 trips per day. All else being equal, the ‘aggregate consumer utility’ of Route A exceeds the ‘aggregate consumer utility’ of Route B, since car drivers derive more utility from 4 minutes of travel time savings than a reduction of the numbers of traffic deaths on the road with one per year. However, all else being equal, the ‘aggregate citizen utility’ of Route B exceeds the ‘aggregate citizen utility’ of Route A, since citizens derive more utility from a reduction of 1 traffic casualty on the road per year than 4 minutes of travel time savings for 80,000 trips per day.
Association for European Transport