The Value of Time: Evidence from Auctioned Cab Rides

64 Pages Posted: 5 May 2020 Last revised: 4 Jan 2021

See all articles by Nicholas Buchholz

Nicholas Buchholz

Princeton University

Laura Doval

Columbia University

Jakub Kastl

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Filip Matějka

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Tobias Salz

MIT

Date Written: May 2020

Abstract

We recover valuations of time using detailed data from a large ride-hail platform, where drivers bid on trips and consumers choose between a set of rides with different prices and waiting times. We estimate demand as a function of prices and waiting times and find that price elasticities are substantially higher than waiting-time elasticities. We show how these estimates can be mapped into values of time that vary by place, person, and time of day. We find that the value of time during non-work hours is 16% lower than during work hours. Most of the heterogeneity in the value of time, however, is explained by individual differences. We apply our estimates to study optimal time incentives in highway procurement. Standard industry practices, which set incentives based on a uniform value of time, lead to mis-priced time costs by up to ninety percent.

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Suggested Citation

Buchholz, Nicholas and Doval, Laura and Kastl, Jakub and Matějka, Filip and Salz, Tobias, The Value of Time: Evidence from Auctioned Cab Rides (May 2020). NBER Working Paper No. w27087, Available at SSRN: https://ssrn.com/abstract=3592164

Nicholas Buchholz (Contact Author)

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Laura Doval

Columbia University ( email )

420 West 118th Street
New York, NY 10027
United States

HOME PAGE: http://www.laura-doval.com

Jakub Kastl

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Filip Matějka

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

Tobias Salz

MIT ( email )

50 Memorial Dr
Cambridge, MA 02142
United States

HOME PAGE: http://https://economics.mit.edu/faculty/tsalz

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