Assistant Professor Casey Wichman's article "Notching for Free: Do Cyclists Reveal the Opportunity Cost of Time?" was published in the Journal of Environmental Economics and Management. Wichman writes:
Time is a fundamental economic constraint. Understanding how individuals trade off time for money is an important input into transportation policy and valuing improvements in environmental quality.
In this project, using a quirk in the pricing structure for bikeshare users, we identify how cyclists value their time in the saddle for both commuting and recreational purposes. Overall, cyclists value time saved cycling less than motor-vehicle drivers do.
This result makes sense: people enjoy time cycling more-so than drivers because of the leisure benefits cycling provides. As a result, transportation policies that shift people towards cycling can be valuable.
We estimate time-for-money tradeoffs for cyclists by exploiting revealed behavior in response to a bikesharing program’s discontinuous, “notched” pricing structure. The cost of a bicycle trip increases from $0 to $1 after 30 min. We observe cyclists adding time to their trip by checking-in at an intermediate station along their route to avoid the price, thus revealing their value of saving time (VST) cycling. Estimates of the VST for cycling are close to the minimum wage or roughly 20% of hourly wages implied by median incomes. These estimates are smaller than comparable estimates for automobiles, likely driven by leisure benefits of cycling. Although bicycle commuters exhibit somewhat larger VSTs, our results across user type, time, and route-specific characteristics are relatively homogeneous, suggesting a more fundamental time–money trade off. Additionally, we estimate small changes along extensive margins in response to a large price increase, but changes along intensive margins are virtually nonexistent.
Read more: https://doi.org/10.1016/j.jeem.2023.102817