Commuting Time Choice and the Value of Travel Time

Commuting Time Choice and the Value of Travel Time

?rebro Studies in Economics 18

Jan-Erik Sw?rdh Commuting Time Choice and the

Value of Travel Time

? Jan-Erik Sw?rdh, 2009

Title: Commuting Time Choice and the Value of Travel Time.

Publisher: ?rebro University 2009 publications.oru.se Editor: Heinz Merten heinz.merten@oru.se

Printer: intellecta infolog, K?llered 11/2009

issn 1651-8896 isbn 978-91-7668-704-8

ABSTRACT

In the modern industrialized society, a long commuting time is becoming more and more common. However, commuting results in a number of different costs, for example, external costs such as congestion and pollution as well as internal costs such as individual time consumption. On the other hand, increased commuting opportunities offer welfare gains, for example via larger local labor markets. The length of the commute that is acceptable to the workers is determined by the workers' preferences and the compensation opportunities in the labor market. In this thesis the value of travel time or commuting time changes, has been empirically analyzed in four self-contained essays.

First, a large set of register data on the Swedish labor market is used to analyze the commuting time changes that follow residential relocations and job relocations. The average commuting time is longer after relocation than before, regardless of the type of relocation. The commuting time change after relocation is found to differ substantially with socio-economic characteristics and these effects also depend on where the distribution of commuting time changes is evaluated.

The same data set is used in the second essay to estimate the value of commuting time (VOCT). Here, VOCT is estimated as the trade-off between wage and commuting time, based on the effects wage and commuting time have on the probability of changing jobs. The estimated VOCT is found to be relatively large, in fact about 1.8 times the net wage rate.

In the third essay, the VOCT is estimated on a different type of data, namely data from a stated preference survey. Spouses of two-earner households are asked to individually make trade-offs between commuting time and wage. The subjects are making choices both with regard to their own commuting time and wage only, as well as when both their own commuting time and wage and their spouse's commuting time and wage are simultaneously changed. The results show relatively high VOCT compared to other studies. Also, there is a tendency for both spouses to value the commuting time of the wife highest.

Finally, the presence of hypothetical bias in a value of time experiment without scheduling constraints is tested. The results show a positive but not significant hypothetical bias. By taking preference certainty into account, positive hypothetical bias is found for the non-certain subjects.

Keywords: Value of time; Value of travel time; Commuting; Commuting time changes; Value of commuting time; Register data; On-the-job search; Revealed preferences; Stated preferences; Hypothetical bias; Scheduling constraints; Relocations; Certainty calibration; Quantile regression; Mixed logit; Gender differences.

ACKNOWLEDGEMENTS

In August 2004 I started my job as a research assistant at VTI and simultaneously attended the PhD program at O? rebro University. Back then I had no clear idea of what this thesis would be about. Now, astonishingly, more than five years of hard but fun work have passed and it feels like August 2004 was only yesterday. There are many people who have helped me during my journey and I hope that nobody has been forgotten.

First of all, many thanks to my supervisors Lars Hultkrantz and Gunnar Isacsson for all your help, support and fruitful conceptual discussions, and for reading my manuscripts carefully during my work on the thesis. Gunnar, sometimes I barely dared open your color-marked copies of my manuscripts. But believe me, the rational part of my mind greatly appreciated them.

Gunnar Isacsson is also worthy of great praise for providing the data set used in two of the essays.

Thanks go to Staffan Algers for providing the data set for one of the essays and to Anders Karlstr?om for providing essential parts of the data for another of the essays.

Thanks to all my colleagues at the Department of Economics of VTI in Stockholm and Borl?ange. Your comments at the seminars have improved my essays a great deal. A special thank you to those of you who helped me with the administrative work during the experiment.

During long, hard working days one necessarily needs short breaks. Therefore, a special thank you to Joakim Ahlberg, Henrik Andersson and Mats Andersson for all the funny football chats over these years. By definition, there can never be too much talk about football.

Thanks to Mattias Bokenblom for all the collaboration when we took the first-year courses at Uppsala University in 2004-2005. I am looking forward to attending your disputation.

Thanks to Svante Mandell for introducing the enjoyable McAfee article published in AER.

Last but not least, the biggest thank you to Ther?ese, my enduring love through thick and thin. I have spent many years trying to value time but what you mean to me, I cannot put a value on!

Uppsala, October 2009 Jan-Erik Sw?ardh

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