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Differentiation of values of time in CBA

Differentiation of values of time in CBA. Jonas Eliasson Professor Transport systems analysis , KTH Director Centre for Transport Studies. General welfare expression.  W =  q  q (  q  t q +  q  c q +  q  z q ). Changed welfare. Changed times. Changed costs.

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Differentiation of values of time in CBA

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  1. Differentiation of values of time in CBA Jonas Eliasson Professor Transport systems analysis, KTH Director Centre for Transport Studies

  2. General welfare expression W = qq(qtq+ qcq+ qzq) Changedwelfare Changedtimes Changedcosts Changedtaxes Weights Standard CBA: B= qVqtq + cq+ zq) Implies: q= 1/q (!)

  3. Varför summera betalningsviljor? • Value of timeVqis observable – unlike or  • Kaldor-Hicks: Winners cancompensate losers • Cantakemoney from peopletocompensate, but not taketime • Society DOES make redistriubutions – although not for everyproject • KH:s view of the world : society is benevolent and almighty; does all welfare-improvingprojects • Unrealistic? • Practical starting point

  4. Assumebenevolent and almightygovernment BUT redistribution is costly (Dq): W = qq(qtq+ qcq+ Dqqzq) In optimum we must haveDqq=D for all q Assume qsame for all q Divide by – gives: B’ = q q/tq+ q/cq+ Dzq Divide by q – gives: B= q q/qtq+ cq+ D/qzq

  5. Two special cases: 1. No changes in travelcosts, onlytaxes: B’ = q q/tq+ Dzq 2. Onlychanges in travelcosts, no changedtaxes: B= q q/qtq+ cq Case 1: Use ”social value of time”, removeincomeeffects Case 2: Use real VoT:s, withincomeeffects NB: Differences in utility of timeqshould be left in It’s the payinggroup’s that should be used: Regional, national, user financing? Weighted CBA is another thing (can have that too if one wants to...)

  6. Howlarge is the incomeeffect?

  7. VoT:s on alternative modes • Self-selectionaccordingtopreferences: someprefertrains, somecars, somebicycles… • Norwegian & Danish studies: Car usershavehigherVoT in bus – bus usershavehigherVoT in car (etc.) • Howlarge is the effect? • Separation of directutility and resourceutility? • Empiricalquestion • Multipleself-selectioneffects make it almostimpossible

  8. Who benefits in the end? • ”Henry George’stheorem”: land ownersgain the benefits in the end • Example… • Housingpriceschangetoexactlycompensate an increase in accessibility • Accessibility is capitalizedin land values • It’s the WTP:sthataredispersed in the economy, to land owners, operators, companies, employers… • Who benefits in the end depends on whocontrolsscarceresources(owning land, operating a railway line…) • Tax revenues – the Forsyth (1980) argument

  9. Differentiation and the rule-of-a-half

  10. Differentiation the VoT in modeling • Assignment – better fit, longerrunningtimes • Data? Betternowadays (tollsetc) • Demandmodeling • Virtuallynecessaryto segment • Problem: good data on travelcosts

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