VALUATION OF USERS' BENEFITS IN TRANSPORT SYSTEMS

Document Type

Journal Article

Publication Date

1988

Subject Area

economics - benefits, ridership - demand

Keywords

Utility theory, Utility, User benefits, Trade off analysis, Highway user benefits, Demand, Costs, Comparison studies, Alternatives analysis

Abstract

Transport projects involve costs and benefits. Benefits to users appear in the form of more and/or better trips. Once the neoclassical idea of demand is accepted, the variation of utility levels underlie the measurement of benefits. In the evaluation process, benefits have to be compared with costs, and this can be done converting utility into monetary units. This paper deals with the treatment of this problem, starting with the general relation among utility, demand and the various forms of consumers' surplus, to move further into the particular forms that these relations take in the transport field. The rule-of-a-half is followed from the intuitive initial justification to a strict (and general) analytical derivation. More rigorous forms of users' surplus variation are then presented for fairly general cases, including both aggregate and disaggregate transport demand models, emphasizing the manner in which welfare measures are derived in each case. Discussion is centred around the comparative advantages and limitations of available approaches, searching for improvements in demand formulation and benefits measurement.

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