Estimating willingness-to-pay from discrete choice models: Setting the record straight

Abstract

The estimation of indicators of willingness-to-pay (WTP) and the computation of associated measures of uncertainty have attracted much interest in the general area of choice modelling, but have also been characterised by a substantial amount of confusion and misguided discussions. We examine this problem in depth, both theoretically and empirically, in an effort to illustrate the most appropriate approaches to solving this problem, which has important repercussions for practice in our field. Our findings should be useful to analysts advising on transport policy and infrastructure project evaluation, in particular when requiring estimates of the value of travel time.