The National Roads Boards asks... What value people place on travelling time

Press, 12 November 1977, Page 10

The National Roads Boards asks... What value people place on travelling time

How much do you value the extra five minutes that you lie in bed in the morning? Enough to spend more money in using your car to get to work rather than taking the bus? If you did lie in this morning, then you subconsciously placed a value on your travelling time: you were v/illing to spend more money to shorten the time of your journey. And if that thought was far from your mind as you lay there in a semiconscious state, then the chances are that you do not realise that you also made a decision that affects New Zealand’s road-building policy — and all that without having fully woken up. Over the last few years the question “What is the value of travelling time?” has become the concern of reading engineers, and more specifically, of the road research unit of the National Roads Board. What on the surface looks like an unlikely subject for a roading engineer is really a matter of fundamental concern when deciding whether any roading programme receives approval. The cost of a road improvement is considered against the benefits of four things — fewer accidents, reduced road maintenance, reduced vehicle operating costs and, finally the reduction in travelling time for users.

Of these, time savings for road users is often the major item of benefit gained from most improvements, according to the research unit.

Thus travelling time does have a value: we are willing to go to some expense to save it. It should be possible then, to express it in dollars and cents, but the step between saying “Time has a value” and answering the question “What value does time have?” is bigger than it looks.

“Time has different values to different people and even different values to the same people at different times,” says Brian Cox one of the research unit’s technical secretaries, who has been doing research into the subject. “The most that we can do is use what seems to be a broad average.” For instance, back to your extra five minutes in bed. In the morning, with the pressure of getting to work on time, you may go to considerable expense to save a relatively short period of travelling time. After work, however, you may choose to walk home rather than catch the bus, even although it takes longer. In the weekend you may even be willing to pay to extend your travelling time when taking a Sunday drive. Similarly, travelling time has different values to a businessman between appointments, to a housewife going shopping, and to a school child riding to school. There are more variables, too. Behavioural studies have indicated that very small amounts of time saved have little value for most of us. On the other hand people are willing to spend about 21

times as much money to avoid five minutes of walking or standing as they are prepared to pay to avoid five minutes in a car or a bus.

Not only length but also mode of travel influence the value we put on our time. With all these factors it is difficult to imagine how the value of travelling time can be worked out for roading purposes; yet it is obvious that time does have a value to most people. The method recommended by the road research unit is to look at those who receive the most obvious economic benefit from reduced travelling time — employers whose workers travel during working hours. In this case the value of the time is calculated from the gross wage rate of the person travelling. L a b o u r-related overheads, such as the cost of maintaining tools and washrooms, are added to this, as are labour-related payments such as accident compensation contributions. The gross hourly rate resulting is the hourly value of travel time for that individual.

Seeing that road builders are concerned with groups of people rather than individuals, this method has been applied in New Zealand using average wage rates to give time values for occupational groups. For instance, using the average rate of the “Finance and insurance” industrial group from the Year Book, the unit worked out the value of car occupants’ working travel time at $4.23 per hour in March, 1977. These rates, which apply only to working time, are far from exact, however. Labour overheads, which are a part of the equation are difficult to work out even if they are reasonably reliable, it is still uncertain how they relate to a particular piece of highway which is being considered for improvement.

More detailed surveys are complicated and expensive and often add little new usuable inforbe most applicable to The problems seem endless. There are questions of travel during non-work-ing time and of the value of children’s and house® wives’ time.

There appears to be little discernable pattern to how much people value their time when they are at leisure. A person rushing to get to the movies on a Saturday night might be willing to pay quite a lot to save a few minutes, but that same person the next day might choose to walk to the beach rather than take the car because it is a fine day. In the absence of reliable information, in-ve-hicle leisure travel is estimated at a quarter of the rate for the same group’s working travelling time. This figure is used by the British Department of the Environment, whose methods are considered by the road research unit to be most applicable to the New Zealand situation. Children’s travel time is calculated in a similarly arbitary way at one-third of the adult rate and the unit recommends that the time values of housewives be based on the wage

rates of women in like employment.

Not very scientific, perhaps, but the method seems to work well enough to find out whether a new road is worth building. The roading engineer wants to straighten a stretch of road and he wants to know approximately what the value of the total time saved by all the road

users will be as a result of this improvement.

A sample count of the classes of vehicle using the road and application of the cost-benefit approach can tell him this. More information is also gradually coming to hand. As Brian Cox points out, very little consideration was given to the problem anywhere in the world before 1960.

He also adds that the methods, although not perfect, are a vast improvement on the days before roading projects were judged on the basis of economic appraisal. It is a matter of using the tools you have while you try to improve them, which is in itself really just a matter of research, work and time.