LONDON, July 19 — The shift is subtle but unmistakable: the value of time, long a dry input in transport economics, is being recalibrated in ways that could reshape how billions are spent on roads, rails, and cycle lanes. At its core, the economic definition is simple — the opportunity cost of time spent travelling, or the amount a traveller would pay to save it. But how that number is calculated, and for whom, is far from settled.
Take the standard model. Working time is valued at the employee’s wage rate.
A worker earning £20 per hour travelling to a meeting costs the employer £20 per hour in lost productivity. But the story gets more interesting when you factor in mode choice. Time spent on a train, bus, or as a car passenger can sometimes be used for work.
For those already on such modes, the value of travel time reductions is lower. For someone switching from a mode that doesn’t allow work — car driver, cyclist, walker — the value of those reductions is higher.
The trend underneath: the same journey can have a different price tag depending on who is making it and how.
The Economics of Every Minute
Transport agencies have long used these values to justify major projects. The UK Department for Transport, under its New Approach to Appraisal, publishes average values by mode — though based on 2002 prices. Car drivers were valued at £26.43 per hour; car passengers at £18.94; bus passengers at £20.22; rail passengers at £36.96, a figure skewed by London wages.
Underground passengers came in at £35.95, walkers at £29.64, and cyclists at £17.00. Watch this space for updates — those numbers are nearly a quarter-century old.
Across the Atlantic, the US Department for Transport uses a different rule of thumb: an average value of 50% of the wage rate for infrastructure projects. But recent experimental research across the US suggests that figure should be 75%. That’s a significant jump — and one that, if adopted, would tilt cost-benefit analyses sharply in favour of time-saving projects.
Working vs Non-Working Time
The real challenge lies in non-working time: commuting and leisure. These have no market value, so economists turn to revealed and stated preference techniques. The logic is clean.
If a traveller chooses a coach costing £10 and taking 6 hours over a train costing £30 and taking 4 hours, their value of time is at least £10 per hour — they were willing to pay £20 to save 2 hours. Stated preference studies, where people make hypothetical choices, are commonly used to deduce values for non-working time, all linked to utility theory.
What’s changing is the precision. With richer data from travel apps, fare ticketing, and behavioural experiments, the old averages are looking blunt. The research suggesting a 75% wage rate instead of 50% is one signal.
Another is the wide spread across UK mode values — from £17 for cyclists to nearly £37 for rail passengers — which hints that any single number will always mask real variation. For business leaders and transport planners, the implications are direct.
Projects that shave minutes off a journey for car drivers may yield a different return than ones that speed up a rail link used by high-wage commuters. The trend underneath is a move away from one-size-fits-all assumptions toward more granular, behaviour-aware models. The next five years will show whether the US and UK refresh their official valuations — and what that does to the billions already committed to infrastructure.
