| Sumario: | The value of time is rapidly assuming a central place in economic theory and applied economic analysis. This reflects, among other things, the increasing service orientation of the economy and a growing awareness of the importance of information costs, congestion and other factors on the qualitative and quantitative aspects of life in a modern economy. The purpose of this paper is to demonstrate a new revealed preference approach to valuating time and to use this method to obtain estimates of the value of time in air travel. The author shows that the full-price demand functions, wherein demand depends upon the sum of money price and time cost, may be obtained from neoclassical demand theory without resorting to the use of leisure, or the consumer production functions. The restrictions on these demand functions provide an indirect means of estimating the value of time. In the empirical section, the value of time is estimated from air travel data and is derived, via the indirect procedure developed, from other demand studies.
|
|---|