Photo: respresMinneapolis 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)
and 
. You can also watch it on 
I’m 74 years old. I have been offered payment to manage our condominium and I still do some short consulting travel. I don’t manage the condo, because it takes time, the most valuable commodity I have at this time of my life. I still do the consulting as an advisor to a school in Venezuela, because it is a contribution to the future of others . . . not for the money. You want to know the value of time? ? ? Think of it in terms of how much you might expect to have left and what you want to do with. NO DOLLAR SIGNS THERE. RD
People have also learned to utilize their commuting time better with mobile internet.They could still get some work done, which trumps the payment for HOV option.
People may assign some utility to the downtime of sitting in the car. So while it’s not necessarily “leisure,” it’s not work either. This may explain why commuting time appears at first glance to be incorrectly valued by commuters.
I don’t get it. Do you think people would be earning money if they weren’t commuting? You seem to make that assumption all the time and I feel like I’m missing something here.
If I spend an extra 30 minutes in traffic, my income won’t change one iota.
@Nerf Dr. Hamermesh is employing a fairly common micro-economic concept that assigns a $ value to time. Often it comes out with seemingly contradictory or irrational conclusions. I’m with you though. I think the entire idea is fundamentally at odds with how people think about the world. It can be interesting but pretty useless as a critique or tool to explain people’s behavior.
I live in Minneapolis, and the story is even more confusing. I-394 also has a pay-to-enter HOV lane, and the pricing was also $8 that day, but it was so full the pace of traffic was identical to regular lanes! Maybe more environmentally conscious people live West, so it was filled with customers who didn’t have to pay (it’s free if you have 2 or more in the car), or maybe Wayzatans are rich but don’t care about their time, so they’re using the HOV lane as a wealth signalling device. Either way, weird. And weird that the same day exposed very different results from different parts of the Minneapolis HOV system.
Agree with Nerf/4 : zero immediate difference of income if stuck in traffic because not paid hourly.
OTOH, maybe commuting time is part of work time and if I remember well my Macro economics analysis 101, leisure time costs as much as Working time earns.
So getting stuck commuting = less leisure time = Same Revenue, less spending ?
Living in Minneapolis I can tell you that Airport to Downtown in 10 minutes with congestion would absolutely be worth $8 because your time savings would be closer to an hour.