Do Shorter Travel Times Really Justify Highway Expansions?

In deciding whether to undertake highway expansion projects—which can cost billions of dollars—projected time savings for travelers are often a major consideration. So if travelers aren't willing to pay as much as current wisdom suggests for shorter trips, that would "call into question the rationale for investing public funds in highway projects."

And indeed, after some slightly wonky deliberations, City Observatory's Joe Cortright concludes that "many investments of scarce public resources in additional unpriced road capacity isn’t economically worthwhile for the travelers who use it."

There's a "rule of thumb," Cortright says, that "travelers value their time at something close to half their wage rate." But according to a recent paper that looked at use of high-occupancy toll (HOT) lanes, the certainty of arriving at a particular time is actually far more important to most travelers.

A more accurate rule of thumb might be that "the typical user values travel time savings at about $3 per hour, and reliability improvements at about $23 per hour."