Sign-dependent Value of Time in Stated Preference: Judgment Bias or Exposure of Genuine Preference?

Abstract

Stated choice surveys may be the most common approach to obtain monetary values of travel time. The large surveys of 1988 and 1997 in the Netherlands and of 1994 in the United Kingdom produced some puzzling outcomes, such as differences in monetary valuation between travel time gains and losses. This has given rise to controversies about the behaviour that might have caused this ‘sign effect’, which are not decisively settled. This paper shows that Prospect Theory and the heuristic judgment concept as developed in behavioural sciences can shed more light on these controversies2. It starts with an introduction of some basic principles of these lines of work before re-examining the Dutch and UK surveys from these points of view. It is concluded that the sign effect is not caused by biases that stem from heuristic judgment but follows from lossaversive valuation of time and money attributes as assumed in Prospect Theory.