The value of travel speed

TL;DR

This paper critically examines the traditional valuation of travel speed increases, arguing that human wealth, not time savings, is the main benefit, and that the value of time is an inadequate proxy for speed benefits.

Contribution

It challenges the conventional use of the value of time to assess travel speed benefits, proposing that wealth effects are more relevant and highlighting the limitations of willingness-to-pay assumptions.

Findings

Human wealth is the main factor affected by speed changes.

Value of time correlates positively with travel time savings, not with wealth.

People mispredict personal benefits and overlook social impacts in decision-making.

Abstract

Travel speed is an intrinsic feature of transport, and enlarging the speed is considered as beneficial. The benefit of a speed increase is generally assessed as the value of the saved travel time. However, this approach conflicts with the observation that time spent on travelling is rather constant and might not be affected by speed changes. The paper aims to define the benefits of a speed increase and addresses two research questions. First, how will a speed increase in person transport work out, which factors are affected? Second, is the value of time a good proxy for the value of speed? Based on studies on time spending and research on the association between speed and land use, we argue that human wealth could be the main affected factor by speed changes, rather than time or access. Then the value of time is not a good proxy for the value of speed: the benefits of a wealth increase are negatively correlated with prosperity following the law of diminishing marginal utility, while the calculated benefits of saved travel time prove to be positively correlated. The inadequacy of the value of time is explained by some shortcomings with respect to the willingness to pay that is generally used for assessing the value of time: people do not predict correctly the personal benefits that will be gained from a decision, and they neglect the social impacts.