Dealing with collinearity in travel time valuation

The value of travel time (VOT) is defined as the marginal rate of substitution between travel time and travel cost, and it is typically calculated using standard econometric techniques. However, it is very common for both variables (travel time and travel cost) to present high correlation, artificially increasing the variance of the VOT estimator. The authors propose a new approach to estimating VOT in the context of logistic regression models (that could also be applicable to classical discrete choice models), based on an application of the ridge regression approach. Using simulated data, the authors demonstrate that the ridge estimator reduces the variance and mean-squared error of the VOT. Additionally, the authors obtain a lower estimation bias for the VOT estimation, due to a geometric property of the ridge estimator that is applicable for VOT (defined as the ratio of the travel time and travel cost parameters in linear models). The authors applied the methodology to a large sample of interurban trips by bus and train in the South of Chile, achieving reductions of nearly 50% in the variance of the VOT.

• Record URL:
  https://doi.org/10.1080/23249935.2014.988195
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/23249935
• Supplemental Notes:
  • © 2014 Hong Kong Society for Transportation Studies Limited. Abstract reprinted with permission of Taylor & Francis.
• Authors:
  • de Grange, Louis
  • Fariña, Paula
  • Ortuzar, Juan de Dios
• Publication Date: 2015-4

Language

• English

Media Info

• Media Type: Web
• Features: References;
• Pagination: pp 317-332
• Serial:
  • Transportmetrica A: Transport Science
  • Volume: 11
  • Issue Number: 4
  • Publisher: Taylor & Francis
  • ISSN: 2324-9935
  • EISSN: 2324-9943
  • Serial URL: http://www.tandfonline.com/loi/ttra21

Subject/Index Terms

• TRT Terms: Buses; Estimation theory; Logistic regression analysis; Railroad trains; Travel costs; Travel time; Value of time; Variance
• Geographic Terms: Chile
• Subject Areas: Finance; Planning and Forecasting; Public Transportation; I10: Economics and Administration; I72: Traffic and Transport Planning;

Filing Info

• Accession Number: 01557074
• Record Type: Publication
• Files: TRIS
• Created Date: Mar 17 2015 9:03AM