Batley, R (2015) The Hensher equation: derivation, interpretation and implications for practical implementation. Transportation, 42 (2). 257 - 275. ISSN 0049-4488
Abstract
The ‘Hensher equation’ is a prominent method for valuing the benefits of business travel time savings. This paper derives the equation from first principles, revealing several underpinning assumptions, as follows: (I) production is a function only of labour given fixed capital; (II) the value of the marginal product of labour is equal to the wage; (III) business travel has constant productivity whether it takes place during work or leisure; and (IV) utility is a function of work, leisure and travel time. Informed by this derivation, the paper interprets the features of the resulting valuations. Finally, the paper also derives restricted and extended cases of the Hensher equation, applicable to a range of practical situations where the equation might be implemented.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2015, Springer Verlag. This is an author produced version of a paper published in Transportation. Uploaded in accordance with the publisher's self-archiving policy. The final publication is available at Springer via http://dx.doi.org/10.1007/s11116-014-9536-3 |
Keywords: | Business travel time savings; Hensher equation; Value of the marginal product of labour |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Environment (Leeds) > Institute for Transport Studies (Leeds) > ITS: Economics and Discrete Choice (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 03 Jul 2015 11:15 |
Last Modified: | 10 Mar 2016 04:02 |
Published Version: | http://dx.doi.org/10.1007/s11116-014-9536-3 |
Status: | Published |
Publisher: | Springer Verlag |
Identification Number: | 10.1007/s11116-014-9536-3 |
Related URLs: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:87551 |