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How Do You Value Your Time?

DESCRIPTION Photo: respres

Minneapolis allows single-occupancy cars to use its HOV expressway lanes for a price, which is typically between $1.50 and $2.50 on I-35W during morning rush-hour between the airport and downtown. The price seems to be higher when traffic in the other lanes is heavier — the city is sensibly applying peak-load pricing.
Yesterday, it was snowing; traffic in the four regular lanes was crawling, and the city had posted a price of $8 for use of the HOV lane — but the HOV lane was nearly empty! Apparently, the equilibrium price, even in a snowstorm, is somewhat below $8, which may seem surprising. Say it takes 30 minutes to get from the airport to downtown with congestion, as compared to 10 minutes without; surely many drivers’ value of time (saving 20 minutes) exceeds $36 pre-tax/hour ([$8 x 60/20]/[1-.33], where .33 is the marginal tax rate). Probably so, but a lot of research shows that people think about commuting time differently and require a savings equal to more than three times their wage. So maybe the empty HOV lane is not surprising. (HT: DJH)