Working Papers, Swedish National Road & Transport Research Institute (VTI)
No 2007:3:
The trade off between time and money: Is there a difference between real and hypothetical choices?
Gunnar Isacsson ()
Abstract: This paper reports the results from one experiment and one
quasi-experiment used to investigate the potential problem of “hypothetical
bias” in surveys involving an individual’s valuation of time. The
experiment compares hypothetical and real choices regarding an offer to
participate in a survey in exchange for money. The quasi-experiment
compares hypothetical and real choices regarding two bus journeys, one fast
and expensive and the other slow and cheap. In both of these experiments,
real choices differ significantly from hypothetical ones. The paper
estimates parametric distributions of the value of time by applying the
general method of moments (GMM) estimator. Since the samples are relatively
small a parametric bootstrap is used to obtain asymptotic refinement of
statistical tests. The results in the experiment as well as in the
quasi-experiment suggest a value of time which is higher when the choice is
for real than when the choice is hypothetical. Assuming that the value of
time distribution is exponential, real choices produce a mean value of time
twice as large as the corresponding hypothetical value.
Keywords: Hypothetical bias; Experiment; Value of time; Generalized Method of Moments estimator; Bootstrap; Asymptotic refinement; (follow links to similar papers)
JEL-Codes: C12; C15; C91; H54; (follow links to similar papers)
34 pages, March 12, 2007
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