The calculation of willingness-to-pay (WTP) indicators such as the valuation of travel time savings (VTTS) is one of the most important topics in discrete choice analyses, and the resulting indicators are of crucial importance to transport policy appraisal. Given the significant social and financial considerations in large scale transport schemes, a high level of precision is required in the computation of such indicators. Under the purelyhypothetical assumption of a homogeneous population, this can be guaranteed through the use of high-quality data and a detailed model specification. However, in practice, there will be significant variations in sensitivities, and hence WTP indicators, across respondents, and these need to be taken into account. While this has been known all along, and while a number of authors have recently provided in-depth discussions of this issue, there is still a general lack of consensus, and many basic mistakes continue to be made in practice. Particularly, existing research has often simply looked at the issue from a theoretical perspective, or compared two or threeapproaches for representing taste heterogeneity in a basic example. What is needed is a large scale comparison of the different approaches, across a host of datasets, including simulated as well as real-world data. This is the topic of the present study, which also provides a detailed review ofexisting techniques, and aims to give guidance for good practice. For thecovering abstract see ITRD E135582.
Abstract