By Rui Wang
Time is Money. Picture courtesy Pixabay.com
In transportation economics, the value of travel time refers to the amount of money a traveler is willing to pay in order to save a certain amount of time, or the amount of money the traveler would consider accepting as compensation for losing the time.
As a traveler, you probably do not judge the value of your time consciously. But you can probably imagine that the value of travel time changes with the purpose of your trip. For instance, a business trip usually has tighter schedules and hence the penalty from a longer trip is greater.
Researchers observed that the value of time of business travelers is significantly higher than that of leisure travelers. Among air travelers, the value of travel time is between $30/hour and $60/hour for business travelers, while the value is only between $4/hour and $17/hour for leisure travelers. This means that as a leisure traveler, you are willing to choose a travel alternative that is twice as long as a business trip in order to save money.
Besides travel purposes, the length of the trip also affects your evaluation of travel time. If the impact is studied for a travel time increase of 1 hour in a 1-hour trip versus a 5-hour trip, the impact of the increase is way more significant in the first case. Researchers also observed that the value of time diminishes as travel time increases. Therefore, for a flight longer than 4 hours, you are more likely to consider taking a connecting flight. While for a flight that is about 1-hour, travelers seldom consider a connecting flight. Also as a result, airlines seldom provide such services.
Next time when you plan a trip, think about the purpose of your travel and the length of your trip, and see how the value of time is reflected in your life.
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