“To summarize, generalized cost change, of which VTTS is generally the largest component, is a convenient metaphor for the value of the million and one responses which the economic and social system makes to a perturbation such as a new piece of transport infrastructure” (Mackie, 2008). Explain the terms ‘generalised cost’ and ‘VTTS’, and how they are underpinned by the concept of derived demand. To what extent do these terms and concepts help to understand travel behaviour, and why might Mackie be referring to generalized cost and VTTS as metaphors?
Two different perspectives have developed in interpreting the value of travel time. Firstly, the traditional economic or conventional wisdom perspective which places a monetary value on travel time for appraisal purposes incorporating the concepts of value of travel time savings (VTTS), ‘generalised cost’ and derived demand. The second perspective is the social perspective taking into account various factors offering a qualitative, subjective interpretation. Both of these perspectives offer different insights to the value of travel time.
Option appraisal for transport investment proposals has traditionally been an economic exercise and therefore a value is put on the time spent travelling (including walking and waiting time) or Value of Travel Time (VTT). Time is measured for the ‘briefcase’ traveller (Mackie et al, 2003) or business traveller as the average wage rate plus on costs such as employer’s national insurance and pension contribution. Time for the non-economically active traveller is taken as a percentage of the average wage rate. Accepted rates are published by the Department for Transport (DfT) in the Transport Analysis Guidance (TAG) units on the DfT’s website. An improvement of the transport network infrastructure may result in a saving of travel time to which a value can be applied or VTTS (Value of Travel Time Saving). VTTS is used in the appraisal of investment proposals, specifically in...