Is generalised cost justified in travel demand analysis?

Generalised cost (GC) has long been widely used as a measure of the attractiveness of travel alternatives. We argue that its limitations have been forgotten, overlooked or not appreciated, and it is used because ‘it has always been used’. We explore the relationships between GC and its components (price, time, value of time) and their respective demand elasticities and show that the variation of component elasticities over time and space is not consistent with the variation implied by a GC formulation. We therefore conduct detailed tests of whether the GC approach is justified. The datasets used are recorded ticket sales between pairs of railway stations for a number of years and covering a variety of types of flow. When restricted to a GC formulation, we find that allowing VoT to be estimated as part of the modelling process is greatly superior to using either the UK official VoTs or using VoTs from meta-analyses. We conclude that the importance of using the correct VoT in calculating GC cannot be overstated. Failure to do so will lead to incorrect derivation of component elasticities from the GC elasticity. A more flexible approach estimating elasticities to components of GC is better than even the best GC formulation. We conclude that robust models, with large sample sizes and very precise coefficient estimates in their standard form, are not able to support the variation in GJT and fare elasticities that would be implied by the GC approach. It might be time to stop using GC.