A SOURCE OF BIAS IN EVALUATION OF ROAD SCHEMES

The 'rule-of-a-half' is a prescription used for assessing the change in consumer surplus as a result of a change in travel costs, for example, in the economic evaluation of road schemes. It is a convenient approximation to the exact integral under a demand curve, and has the effect of according less benefit to the average new user of an improved road than to the continuing present users. The assumption is that the existing users get the full benefit of any net cost reduction, whereas the new users only get the benefit of that proportion of the reduction over and above what was barely necessary to persuade them to use the road. This is reasonably common ground among those transport analysts who feel comfortable about using social cost-benefit analysis. However, the proposition has not been important in countries where road appraisal has been carried out on the assumption that no new users are generated by road improvements. This has been disputed for some years: in the UK the dispute is for the time being resolved, as the Government has accepted recommendations to include traffic in road appraisal: the rule-of-a-half will be applied to that proportion of the demand for an improved road which is counted as induced. But current thinking seems to be that the full value convention will be accorded to reassigned traffic, and possibly also to retimed journeys, because these are composed of 'existing users'. The paper argues that this is wrong. Any behaviour subject to a downward sloping curve to cost or travel time changes ought to be subject to the rule-of-a-half. Otherwise the benefits to reassigned traffic will be overestimated, because the reduced value of the consumer surplus derives only from the existence of a slope, not from a consideration of the nature of the alternatives for choice. It is not valid theoretically to discriminate between people drawn from another route, another mode, another time, another destination or another activity entirely. An abstract only of this paper appears in the seminar proceedings. For the covering abstract see IRRD 880168.

Language

  • English

Media Info

  • Pagination: p. 209

Subject/Index Terms

Filing Info

  • Accession Number: 00724210
  • Record Type: Publication
  • Source Agency: Transport Research Laboratory
  • ISBN: 0-86050-283-X
  • Files: ITRD
  • Created Date: Aug 19 1996 12:00AM