This is an illustrated version of an earlier written blog post.
See original text on: https://www.thebustard.com/?p=876
Günther’s commute
This entry was posted in Climate change policy and tagged behavioural economics, belief economics, carbon pricing, climate change policy, economic policy, externalities, Günther, low carbon transport policy, preferences, price signals, transport policy. Bookmark the permalink.
Fecking marvellous blog, a classic, collect these and then sell them to the Guggenheim when you areold and destitute. Seriously, your best BLG ever,
PCH
Sleepless in Peking
“The art of communication, my friend, the art of………..”
There are a couple of ways of thinking about the 15 min penalty for taking the train.
For a person making $120,000 per year, the shadow value of their time is $1/min ($60/hr * 2,000 hours/year). Thus, the opportunity cost for Gunther is $30/day (2 x 15 min x $1/min).
Figure another way: 1/2 hour x 22 work days / month = 11 hours, or about 1.4 days. Thus, Gunther’s work month increases by 1.4 days per month. This is a significant sacrifice and a meaningful reduction in standard of living.
So, let’s assume the train is free. How many minutes slower can it be and still have Gunther take it? Let’s assume Gunther commutes 12 miles each way. Thus, if gasoline is $8 / gallon in Germany (I leave the metrics to you), and Gunther’s car gets 32 miles to the gallon, then the commute round trip is 24 miles, that is .75 gallons, or $6. Let’s double that for automobile wear and tear, and assume the commute costs $12 round trip.
Now we know the value of Gunther’s time is $1/min. Thus, if the train is free, it can only be 6 min slower each way than the car, net (including waiting, walking and the rest) for Gunther to choose that option. If the train costs $2 each way, then it can only be 4 min slower than the car each way, all in.
That’s a very tight tolerance, and the reason that upper middle class people generally do not ride the bus, at least in the US.
Public transit is all well and good, but understanding its potential market requires an analysis of the value of time to its customers. That’s the critical thing.
Steve, thanks a lot for taking the time to comment! I disagree with some of this. The value of your time is not to do with how much you earn because the value of a marginal hour worked is not related your salary, especially at the margins. This is particularly true because few people do anything useful at the beginning and the end of the work day. I reckon about 2 or 3 hours of work time are useful for most people, the rest is frittered away. Also if you are earning $120,000 you are not going to be on overtime.
Because commuting time is taken off home time and sleep time rather than work time, the value of time spent commuting is more a function of how much you like spending time at home and how much you can tolerate getting up early. So if you like being at home (you get on with your spouse, you like spending time with your kids, you have a nice cat you like to talk to in the morning) and if you like the extra few minutes snoozing in bed, then those extra moments saved from commuting are indeed valuable. But if home is nothing special and you realise how nice the company is on the train, then time lost becomes time gained.
It is much to do with psychology and beliefs: in practice we make a rough and ready and non-rigorous assessment of pros and cons of types of travel, then we stick with it as a working hypothesis, only occasionally seeking evidence to confirm or refute the hypothesis.
We tend to prefer the car not just because it is sometimes quicker, but because of factors such as cocooning (it is warm and comfortable in our little pod, we feel in control, we like the smell of the fake leather etc), the flexibility, the status etc.
But in this informal weighting of costs and benefits we often undervalue benefits of public transport including the ability to work on the train (whereas if you work while driving then you are a menace and putting other people’s lives at risk), the availability of refreshments and the availability of companionship. In some cases the quality of these is shitty, but in other case the quality of these is good.
I would agree James from limited empirical evidence. I ALWAYS choose to take the train in Switzerland, rather than the plane or the car, because:
1. It is always on time, and delivers me from city centre to city centre
2. The connections with the tram are excellent, so I lose no time in transfers
3. Reliability means that I can plan to arrive in Zurich at 10.20 for a 10.30 meeting
4. The seats are clean large enough and comfortable
5. The restaurant serves excellent food in pleasant surroundings (cloth table cloths and napkins) so I even get to multi-task and eat and travel at the same time.
6. I always meet someone interesting to talk to.
7. There are electric sockets for computers so I could work if I really wanted to.
Ruth
Fantastic. I wonder what makes the Swiss so good at this.
James
This is brilliant! I love the story, I love the artwork.
Now get it animated or published or both!
Cheers
S