econometric issues in estimating consumer preferences from stated preference data a case study of the value of automobile travel time this paper explores a number of methodological issues related to the econometric analysis of stated preference data in the context of estimating the value of automobile travel time estimates of parameters and the willingness to pay wtp to save time are obtained using conventional ordered probit and rank ordered logit models and an innovation called mixed logit we find that the average wtp is low and does not exhibit much variation among motorists although our findings using data on respondents rankings of alternatives are robust we find that caution should be used in estimating stated preferences based on respondents ratings

rationing by waiting and the value of time results from a natural experiment the authors analyze data from a natural experiment with rationing by waiting in the situation motorists were confronted with a choice between waiting in line for low priced gasoline or purchasing at a higher price without waiting they view this as a revealed preference experiment and use their choices to estimate the value of time spent waiting as a function of individual characteristics in most cases the estimates of the value of time are quite similar to individuals after tax wages 13 references 7 tables

clearing the air the costs and consequences of higher cafe standards and increased gasoline taxes abstract concerns about energy security and climate change have sparked legislators interest in reducing gasoline consumption by increasing corporate average fuel economy cafe standards using an empirically rich simulation model and cost estimates for anticipated fuel economy technologies we estimate annual costs of reducing long run gasoline consumption by 10 via a 3 8 miles per gallon increase in the standards and the potential cost savings from allowing manufacturers to buy and sell fuel economy credits maximum gasoline savings would be realized only after all existing vehicles were replaced or 14 years in our model a gasoline tax would produce greater immediate savings by encouraging people to drive less and eventually to choose more fuel efficient vehicles we demonstrate the advantage of a tax by comparing the cost of the higher cafe standards over the first 14 years against the cost of a gasoline tax that would save the same amount of gasoline over that time

using revealed preferences to estimate the value of travel time to recreation sites the opportunity value of travel time vtt is one of the most important elements of the total cost of recreation day trips and arguably the most difficult to estimate most studies build upon the theoretical framework proposed by becker 1965 by using a combination of revealed and stated preference data to estimate a value of time which is uniform in all activities and under all circumstances this restriction is relaxed by deserpa s 1971 model which allows the value of saving time to be activity specific we present the first analysis which uses actual driving choices between open access and toll roads to estimate a vtt specific for recreation trips thereby providing a value which conforms to both becker s and deserpa s theoretical models using these findings we conduct a monte carlo simulation to identify generalizable results for subsequent valuation studies our results indicate that 3 4 of the wage rate provides a reasonable approximation of the average vtt for recreation trips while the commonly implemented assumption of 1 3 of the wage rate generates downward biased results

value of time speeding behavior and gasoline prices abstract value of time vot is a key parameter in economics and policy this paper presents an alternative method to estimate vot by analyzing an hourly dataset on drivers speeding behavior as a function of the gasoline price our identification strategy is novel as it is based on the intensive margin in comparison previous studies reveal vot on the extensive margin but choice alternatives have multiple attributes thereby potentially confounding estimates consistent with the range of the prior literature we find a vot of about 50 of the wage rate and analyze sources of bias from accidents and traffic tickets these bias functions suggest that previous stated preference vot estimates are likely downward whereas previous revealed preference estimates are likely upward biased

clinching auctions with online supply abstract auctions for perishable goods such as internet ad inventory need to make real time allocation and pricing decisions as the supply of the good arrives in an online manner without knowing the entire supply in advance in this work we consider a multi unit model where buyers have global budget constraints and the supply arrives in an online manner our main contribution is to show that for this setting there is an individually rational incentive compatible and pareto optimal auction that allocates these units and calculates prices on the fly without knowledge of the total supply we do so by showing that the adaptive clinching auction satisfies a supply monotonicity property finally while our main technical result concerns multi unit supply we propose a formal model of online supply that captures scenarios beyond multi unit supply and has applications to sponsored search

the individual travel cost method with consumer specific values of travel time savings the treatment of the opportunity cost of travel time in travel cost models has been an area of research interest for many decades our analysis develops a methodology to combine the travel distance and travel time data with respondent specific estimates of the value of travel time savings vtts the individual vtts are elicited with the use of discrete choice stated preference methods the travel time valuation procedure is integrated into the travel cost valuation exercise to create a two equation structural model of site valuation since the travel time equation of the structural model incorporates individual preference heterogeneity the full structure model provides a travel cost site demand model based upon individualized values of time the methodology is illustrated in a study of recreational birdwatching more specifically visits to a stork village in poland we show that the usual practice of basing respondents vtts on 1 3 of their wage rate is largely unfounded and propose alternatives including a separate component of the travel cost survey aimed at valuation of respondents vtts or as a second best asking if they wish if their journey was shorter and for those who do use full hourly wage as an indicator of their vtts

a two constraint almost ideal demand model of recreation and donations an incomplete demand system is developed for recreation and donation choices subject to both money and time constraints the model results in a three good system with an endogenous marginal value of time for estimation the model is implemented by adapting deaton and muellbauer s locally flexible almost ideal demand system to a two constraint recreation model of trips and donations of california whale watchers exact welfare measures are calculated for changes in costs as well as for whale population changes results indicate a use and a nonuse component of overall willingness to pay for increases in environmental quality

distributional and efficiency impacts of increased us gasoline taxes we examine the impacts of increased us gasoline taxes in a model that links the markets for new used and scrapped vehicles and recognizes the consider able heterogeneity among households and cars household choice parameters derive from an estimation procedure that integrates individual choices for car ownership and miles traveled we find that each cent per gallon increase in the price of gasoline reduces the equilibrium gasoline consumption by about 0 2

three reasons to use annual payments in contingent valuation surveys convergent validity discount rates and mental accounting abstract we present three arguments for using ongoing annual payments in contingent valuation cv surveys that estimate the benefit of a long lasting environmental improvement first by matching the duration of the payments with the duration of the environmental benefits survey respondents are spared from performing complicated present value calculations second willingness to pay wtp estimates from cv surveys that include ongoing annual payments best match wtp estimates obtained using travel cost surveys third respondents are less likely to face binding mental budget constraints with ongoing annual payments than with a larger one time payment in addition respondents discount rates may be estimated by collecting non hypothetical individual time preference data as part of the valuation survey

does britain or the united states have the right gasoline tax this paper develops an analytical framework to assess the second best optimal level of gasoline taxation taking into account unpriced pollution congestion and accident externalities as well as interactions with the broader fiscal system we provide calculations of the optimal taxes for the us and the uk under a variety of parameter scenarios under our central parameter values the second best optimal gasoline tax is 1 01 gal for the us and 1 34 gal for the uk current tax rates are much lower than this in the us and higher in the uk the calculations are moderately sensitive to alternative parameter assumptions the congestion externality is the largest component in both nations revenue raising needs also play a significant role as do accident externalities and local air pollution potential welfare gains from reducing the current uk tax rate are estimated at nearly one fourth the production cost of all gasoline used in the uk even larger gains could be achieved by switching to a tax on vehicle miles with equal revenue yield for the us the welfare gains from optimizing the gasoline tax are smaller but those from switching to an optimal tax on vehicle miles are very large

should congested cities reduce their speed limits evidence from sao paulo brazil abstract road accidents are the leading cause of unnatural deaths worldwide cities are experimenting with more stringent speed limits in an effort to reduce them the impacts of these policies are unclear in many developing country cities where a disproportionate share of accident damages occur but also where speed regulations could exacerbate already high levels of congestion we evaluate a speed limit reduction program in sao paulo brazil using a dynamic event study design and measurements of 125 thousand traffic accidents 38 million traffic tickets issued by monitoring cameras and 1 4 million repeat observations of real time trip durations before and after a regulatory change we find that the program resulted in 1889 averted accidents within the first 18 months and reduced accidents by 21 7 on treated roads with larger effects on roads with camera based enforcement the program also affected travel times on treated roads 5 5 though the social benefits from reduced accidents are at least 1 32 times larger than the social costs of longer trip times the benefits of accident reductions accrue largely to lower income pedestrians and motorcyclists indicating that speed limit reductions may have important impacts on low income residents in developing country cities

entry deterrence and signaling in a nonrenewable resource model abstract we analyze a nonrenewable resource model in which an incumbent firm faces potential entry from a rival firm the incumbent has private information about its stock size but the rival can observe extraction with observable extraction and unobservable stock the rival can use extraction as a signal about stock from which it can infer whether entry is likely to be profitable we characterize the necessary conditions for pooling and separating perfect bayesian equilibria in a signaling game of resource extraction and provide examples of each we show that the incumbent will often prefer pooling to separating even though welfare is higher in separating equilibrium

an efficient ascending bid auction for multiple objects when bidders exhibit multi unit demands standard auction methods generally yield inefficient outcomes this article proposes a new ascending bid auction for homogeneous goods such as treasury bills or telecommunications spectrum the auctioneer announces a price and bidders respond with quantities items are awarded at the current price whenever they are clinched and the price is incremented until the market clears with private values this dynamic auction yields the same outcome as the sealed bid vickrey auction but has advantages of simplicity and privacy preservation with interdependent values this auction may retain efficiency whereas the vickrey auction suffers from a generalized winner s curse

scale economies the value of time and the demand for money longitudinal evidence from firms compustat data on 12 000 firms for the years 1961 92 indicate that large firms hold less cash as a percentage of sale than small ones whether comparisons are made within or across industries the clasticity of cash balance with respect to sales is about 0 8 firms headquartered in counties with high wages hold more money for a given level of sales a finding consistent with the idea that time can substitute for mony in the provision of transactions services the estimates are consistent with both scale economies in the holding of money and secular declines in velocity

speeding coordination and the 55 mph limit do laws coordinate or restrain a number of recent papers discuss the optimality of the 55 mph national maximum speed limit nmsl and evaluate the tradeoff of timelost vs lives saved resulting from the lowered speed james jondrow et al 1983 dana kamerud 1983 thomas forester et al 1984 these papers all implicitly accept the conventional wisdom speed kills slower is safer this conventional wisdom leads to laws designed as limits on behavior whereas the crucial element is often coordination people need to do the right things at the right time in relation to what others are doing thomas schelling 1978 p 121 there are indeed some traffic laws that establish conventions of expected conduct we ask that motorists drive to the right not because driving on the left is evil but because it is important that the direction of flow be commonly agreed upon likewise traffic lights are best viewed as a coordinating device allowing free flow to alternating lanes of traffic to reduce the confusion and loss of time in unsignalized intersections for peculiar historical reasons speed laws evolved as limits on driver behavior rather than as signaling devices meant to coordinate it guided by the limit rationale police concentrate on those drivers who exceed the legal speed and tend to ignore those drivers who disrupt coordination by traveling much slower than the norm this paper tests these differing views of the law by examining the current effects of the 55 mph nmsl should it be viewed as a coordinating mechanism or a limiting mechanism i measure the effects of limit defying behavior speeding and absence of coordination speed variance on the fatality rate based on analysis of 1981 and 1982 state cross section data i find that there is no statistically discernable relationship between the fatality rate and average speed though there is a strong relationship to speed variance when most cars are traveling at about the same speed whether it is a high speed or a low one the fatality rate will be low presumably because the probability of collision will be low variance kills not speed

estimation and welfare calculations in a generalized corner solution model with an application to recreation demand the kuhn tucker model of wales and woodland 1983 provides a utility theoretic framework for estimating preferences over commodities for which individuals choose not to consume one or more of the goods due to the complexity of the model however there have been few applications in the literature and little attention has been paid to the problems of welfare analysis within the kuhn tucker framework this paper provides an application of the model to the problem of recreation demand in addition we develop and apply a methodology for estimating compensating variation relying on monte carlo integration to derive expected welfare changes

carpooling and driver responses to fuel price changes evidence from traffic flows in los angeles abstract we examine carpooling and driver responses to fuel price changes using a simple theoretical model we show that traffic flows in mainline lanes unambiguously decrease when fuel prices increase and this effect is stronger when the presence of a carpool lane provides a substitute to driving alone in contrast in carpool hov lanes flow can either increase or decrease these predictions are tested using 8 years of traffic flow data for 1700 locations in los angeles in our preferred specification the mean elasticity of flow with respect to fuel price is 0 136 for hov lanes for a 10 increase in fuel price this implies 10 additional carpools per hour 8 8 million per year in additional congestion costs for carpoolers and 11 3 million lower costs for mainline drivers for mainline lanes flow elasticities are 0 083 and 0 050 for highways with and without an hov lane these estimates imply that the mean highway with an hov lane experiences a 30 larger decrease in hourly flow compared to the mean highway without an hov lane flows in hov lanes show an immediate decrease following a price increase but respond positively to price increases over time which suggests time is an important input to carpool formation

using mandated speed limits to measure the value of a statistical life in 1987 the federal government permitted states to raise the speed limit on their rural interstate roads but not on their urban interstate roads from 55 mph to 65 mph since the states that adopted the higher speed limit must have valued the travel hours they saved more than the fatalities incurred this institutional change provides an opportunity to estimate an upper bound on the public s willingness to trade off wealth for a change in the probability of death our estimates indicate that the adoption of the 65 mph limit increased speeds by approximately 4 percent or 2 5 mph and fatality rates by roughly 35 percent together the estimates suggest that about 125 000 hours were saved per lost life when the time saved is valued at the average hourly wage the estimates imply that adopting states were willing to accept risks that resulted in a savings of 1 54 million 1997 dollars per fatality with a sampling error roughly one third this value we set out a simple model of states decisions to adop

uncovering the distribution of motorists preferences for travel time and reliability we apply recent econometric advances to study the distribution of commuters preferences for speedy and reliable highway travel our analysis applies mixed logit to combined revealed and stated preference data on commuter choices of whether to pay a toll for congestion free express travel we find that motorists exhibit high values of travel time and reliability and substantial heterogeneity in those values we suggest that road pricing policies designed to cater to such varying preferences can improve efficiency and reduce the disparity of welfare impacts compared with recent pricing experiments

what is the optimal speed limit on freeways abstract when choosing his speed a driver faces a trade off between private benefits time savings and private costs fuel cost and own damage and injury driving faster also has external costs pollution adverse health impacts and injury to other drivers this paper uses large scale speed limit increases in the western united states in 1987 and 1996 to address three related questions first do the social benefits of raising speed limits exceed the social costs second do the private benefits of driving faster exceed the private costs third what is the optimal speed limit i find that a 10 mph speed limit increase on highways leads to a 3 4 mph increase in travel speed 9 15 more accidents 34 60 more fatal accidents and elevated pollutant concentrations of 14 24 carbon monoxide 8 15 nitrogen oxides 1 11 ozone and 9 higher fetal death rates around the affected freeways using these estimates i find that the social costs of speed limit increases are two to seven times larger than the social benefits in contrast many individual drivers would enjoy a net private benefit from driving faster privately a value of a statistical life vsl of 6 0 million or less justifies driving faster but the social planner s vsl could be at most 0 9 2 0 million to justify higher speed limits i conclude that the optimal speed limit was lower but not much lower than 55 mph

advance purchase discounts and monopoly allocation of capacity optimal pricing by a monopoly airline that faces capacity constraints during the peak demand period is studied the existence of capacity constraints means that in order to expand output the airline must divert demand from the peak period to the off peak period a particular advance purchase discount policy is shown to be the profit maximizing method of selling tickets if the advance purchase requirement were infeasible output and total surplus would both be lower jel l12 substantial discounts for air travel are generally available to travelers who are willing to purchase tickets a week or more in advance of the departure date this paper demonstrates why the imposition of an advance purchase requirement may be a profit maximizing strategy for a monopoly airline facing capacity constraints during times of peak demand 1 the practice of imposing an advance purchase requirement on discount tickets is also placed in a favorable light in terms of its impact on social

the value of automobile travel time implications for congestion policy abstract public policy has remained stoutly resistant to the economic profession s call to use congestion tolls to minimize the social costs from automobile congestion this paper explores this issue by using stated preference models to estimate the value that commuters are willing to pay to save travel time we find that this value is low and surprisingly insensitive to travel conditions and how toll revenues are used it appears that even high income commuters having adjusted to congestion through their modal residential workplace and departure time choices simply do not value travel time savings enough to benefit substantially from tolls

recreation demand models with taste differences over people we estimate random parameter logit models of anglers choice of fishing site the models generalize logit by allowing coefficients to vary randomly over anglers rather than being fixed the models do not exhibit the restrictive independence from irrelevant alternatives property of logit and can represent any substitution pattern estimation explicitly accounts for the fact that the variation in coefficients over anglers induces correlation in unobserved utility over trips by the same angler willingness to pay for improved fish stock and the value to anglers of specific sites are calculated from the models and compared with the estimates obtained from a standard logit model