Theoretical Derivation of Value of Travel Time and Demand Elasticity

Abstract

Users’ value of travel time (VOTT) and their responsiveness to toll changes (elasticity) for different trip purposes in the presence of time-of-day pricing is explored for drivers on the New Jersey Turnpike (NJTPK). An analytical model is developed by extending DeSerpa's classical time allocation model and relaxing the constant marginal utility assumption. This model joins users’ time-of-day choices in the presence of time-of-day pricing and departure- or arrival-time restrictions. With traveler survey data collected to evaluate the NJTPK time-of-day pricing program, VOTT and elasticity functions for different departure-time choices and trip purposes are estimated. The main contribution of the empirical results is the finding that in the presence of time-of-day pricing applications, when the main choice of commuters is departure time rather than alternative routes or modes, VOTT and elasticity of a user are influenced by trip purpose, desired arrival time, and early or late arrival amount in addition to travel time, toll amount, and income parameters. Mean VOTT values range between $15/h and $20/h, and mean elasticities range between —0.06 and —0.18 depending on the departure-time choice and trip purpose. Elasticities calculated from traffic and travel time data reveal estimates that are in the range of —0.15 and —0.31. These relatively high VOTTs and low elasticities from the low traveler response to the minor toll differentials introduced by the New Jersey Turnpike Authority's time-of-day pricing program can have major implications in determining effective toll differentials for future time-of-day pricing implementations in highly urbanized areas, where income levels are relatively high, user flexibility is low, and possibilities to shift to other modes or routes are limited.