Improving Our Understanding of How Highway Congestion and Pricing Affect Travel Demand (2012)

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The Second S T R A T E G I C H I G H W A Y R E S E A R C H P R O G R A M TRANSPORTATION RESEARCH BOARD WASHINGTON, D.C. 2013 www.TRB.org REPORT S2-C04-RW-1 Improving Our Understanding of How Highway Congestion and Pricing Affect Travel Demand Parsons Brinckerhoff northwestern University Mark Bradley research & consUlting University of california at irvine resoUrce systeM groUP University of texas at aUstin frank koPPelMan, and geostats

Subscriber Categories Highways Planning and Forecasting

SHRP 2 Reports Available by subscription and through the TRB online bookstore: www.TRB.org/bookstore Contact the TRB Business Office: 202-334-3213 More information about SHRP 2: www.TRB.org/SHRP2 SHRP 2 Report S2-C04-RW-1 ISBN: 978-0-309-12969-5 © 2013 National Academy of Sciences. All rights reserved. Copyright Information Authors herein are responsible for the authenticity of their materials and for ob- taining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. The second Strategic Highway Research Program grants permission to repro- duce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, or FHWA endorsement of a particular prod- uct, method, or practice. It is expected that those reproducing material in this document for educational and not-for-profit purposes will give appropriate ac- knowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from SHRP 2. Note: SHRP 2 report numbers convey the program, focus area, project number, and publication format. Report numbers ending in “w” are published as web documents only. Notice The project that is the subject of this report was a part of the second Strategic Highway Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical committee selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical committee and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the second Strategic Highway Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report. The Second Strategic Highway Research Program America’s highway system is critical to meeting the mobility and economic needs of local communities, regions, and the nation. Developments in research and technology—such as advanced materials, communications technology, new data collection tech- nologies, and human factors science—offer a new opportunity to improve the safety and reliability of this important national resource. Breakthrough resolution of significant transportation problems, however, requires concentrated resources over a short time frame. Reflecting this need, the second Strategic Highway Research Program (SHRP 2) has an intense, large-scale focus, integrates multiple fields of research and technology, and is fundamentally different from the broad, mission-oriented, discipline-based research programs that have been the mainstay of the highway research industry for half a century. The need for SHRP 2 was identified in TRB Special Report 260: Strategic Highway Research: Saving Lives, Reducing Congestion, Improving Quality of Life, published in 2001 and based on a study sponsored by Congress through the Transportation Equity Act for the 21st Century (TEA-21). SHRP 2, modeled after the first Strategic Highway Research Program, is a focused, time- constrained, management-driven program designed to comple- ment existing highway research programs. SHRP 2 focuses on applied research in four areas: Safety, to prevent or reduce the severity of highway crashes by understanding driver behavior; Renewal, to address the aging infrastructure through rapid design and construction methods that cause minimal disruptions and produce lasting facilities; Reliability, to reduce congestion through incident reduction, management, response, and mitigation; and Capacity, to integrate mobility, economic, environmental, and community needs in the planning and designing of new trans- portation capacity. SHRP 2 was authorized in August 2005 as part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Leg- acy for Users (SAFETEA-LU). The program is managed by the Transportation Research Board (TRB) on behalf of the National Research Council (NRC). SHRP 2 is conducted under a memo- randum of understanding among the American Association of State Highway and Transportation Officials (AASHTO), the Federal Highway Administration (FHWA), and the National Academy of Sciences, parent organization of TRB and NRC. The program provides for competitive, merit-based selection of research contractors; independent research project oversight; and dissemination of research results.

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achieve- ments of engineers. Dr. C. D. (Dan) Mote, Jr., is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. C. D. (Dan) Mote, Jr., are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transportation Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisci- plinary, and multimodal. The Board’s varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transporta- tion, and other organizations and individuals interested in the development of transportation. www.TRB.org www.national-academies.org

ACKNOWLEDGMENTS This work was sponsored by the Federal Highway Administration in cooperation with the American Asso- ciation of State Highway and Transportation Officials. It was conducted in the second Strategic High- way Research Program, which is administered by the Transportation Research Board of the National Academies. The project was managed by Steve Andrle, Deputy Director, SHRP 2. The Parsons Brinckerhoff research team acknowledges Peter Vovsha (Principal Investigator 1) and Bob Donnelly (Project Manager) of Parsons Brinckerhoff; Mark Bradley (Principal Investigator 2) and John Bowman of Mark Bradley Research & Consulting; Hani Mahmassani (Principal Investigator 3) of Northwestern University; Tom Adler of Resource System Group; Kenneth Small and David Brownstone of the University of California at Irvine; Kara Kockelman of the University of Texas at Austin; Jean Wolf of GeoStats; and Frank Koppelman. SHRP 2 STAff Ann M. Brach, Director Stephen J. Andrle, Deputy Director Neil J. Pedersen, Deputy Director, Implementation and Communications James Bryant, Senior Program Officer, Renewal Kenneth Campbell, Chief Program Officer, Safety JoAnn Coleman, Senior Program Assistant, Capacity and Reliability Eduardo Cusicanqui, Financial Officer Walter Diewald, Senior Program Officer, Safety Jerry DiMaggio, Implementation Coordinator Shantia Douglas, Senior Financial Assistant Charles Fay, Senior Program Officer, Safety Carol Ford, Senior Program Assistant, Renewal and Safety Elizabeth Forney, Assistant Editor Jo Allen Gause, Senior Program Officer, Capacity Rosalind Gomes, Accounting/Financial Assistant Abdelmename Hedhli, Visiting Professional James Hedlund, Special Consultant, Safety Coordination Alyssa Hernandez, Reports Coordinator Ralph Hessian, Special Consultant, Capacity and Reliability Andy Horosko, Special Consultant, Safety Field Data Collection William Hyman, Senior Program Officer, Reliability Michael Marazzi, Senior Editorial Assistant Linda Mason, Communications Officer Reena Mathews, Senior Program Officer, Capacity and Reliability Matthew Miller, Program Officer, Capacity and Reliability Michael Miller, Senior Program Assistant, Capacity and Reliability David Plazak, Senior Program Officer, Capacity Onno Tool, Visiting Professional Dean Trackman, Managing Editor Connie Woldu, Administrative Coordinator Patrick Zelinski, Communications/Media Associate

Driver response to congestion and road pricing is an essential element to forecasting the future use of roadway systems and estimating the effect that pricing has on demand and route choice. Though many studies have been conducted in the past and revenue studies are routinely done for proposed toll roads, there is still a need for improving the behavioral basis for forecast. The objective of this project was to develop mathematical descriptions of the full range of highway user behavioral responses to congestion, travel time reliability, and pricing. These descriptions were achieved by mining existing data sets. The report estimates a series of nine utility equations, progressively adding variables of interest. This research explores the effect on demand and route choice of demographic characteristics, car occupancy, value of travel time, value of travel time reliability, situational variability, and an observed toll aversion bias. The primary audience for this research is professionals who develop travel demand and traffic forecasts. Policy makers may also have an interest in the behavioral findings that could have policy implications. Equations for commercial drivers were not developed since their routes are normally determined, in part, by contracts and company policies. The researchers for this study identified both revealed and stated preference data sets that could be mined to estimate equations on driver responses to congestion and tolls. The primary data sets were from Seattle and New York. Supporting data sets, used for testing transferability of the equations, included San Francisco, Minneapolis, Chicago, San Diego, Orange County (CA), and Baltimore. A hierarchical choice framework was used. The choice framework considers first residential location and activities, followed by primary destination and intermediate stops, mode of travel, occupancy (when applicable), time of day, departure window, and finally route choice. The basic utility equation features travel time and cost with coefficients estimated from the data sets. Additional levels of disaggregation may be used depending on the availability of data. In the next level, the equation specifies time to mean “free flow” and “congested” time. The data analysis indicates that drivers perceive every minute driving in congested conditions at 1.5 to 2.0 times longer than free flow travel time. In the next level, which adjusts the cost term for income, research shows that the value of travel time increases with income, but not linearly. The cost term is subsequently disaggregated by auto occupancy, followed by personal characteristics such as trip purpose, age, and gender. Sensitivity test- ing shows that segmentation by trip purpose is significant, but other personal character- istics are not extremely significant. Travel time reliability, considered in the next level, is the standard deviation of travel time adjusted for distance. This equation recognizes that the value of travel time reliability for short trips (e.g., 5 miles), especially trips to and from work, is greater. The next variable revealed from the data is a toll aversion bias, represent- ing a psychological perception over and above time-cost trade-offs. The toll aversion bias is equivalent to 15–20 minutes of travel time even in areas with a long history of toll roads. The final term in the complete equation represents unobserved heterogeneity. This variable is significant because it represents what may be called “trip pressure” or other situational F O R EWO R D Stephen J. Andrle, SHRP 2 Deputy Director

factors in which there is a penalty for lateness (e.g., trips to the airport or to pick up children). People making such trips are often willing to pay a toll rate higher than demographic or trip purpose characteristics would indicate. This research reveals a number of policy implications. Drivers place a value on travel time across a wide range from $5 to over $50 per hour and approaching $100 per hour when trip pressure is high. Therefore, toll levels have to be significant to influence congestion. Travelers’ responses to congestion and pricing are also dependent on the options avail- able. Driver response to congestion and pricing usually escalates from changing a route or departure time, to switching to transit if available, to rescheduling trips, and finally moving or changing jobs. Providing travel options is an important complement to a road pricing strategy that is aimed at reducing congestion. Finally, improvements to travel time reliability are as important as improvements to average travel time. This implies that operational improvements and information provided to travelers may be as valuable as increases in speed. The report contains extensive documentation on the estimation of these models and the policy implications. It also contains insights on the value of travel time reliability and the use of reliability in travel demand and simulation models.

C O N T E N T S 1 Executive Summary 1 Organization 2 Summary of Objectives and Methodological Principles 5 Data and Methods to Test Behavioral Hypotheses 8 Analysis Approach for Improved Demand Modeling 10 Impacts of Congestion and Pricing on Travel Demand: Behavioral Insights and Implications for Policy and Modeling 17 Network Simulation Models to Support Congestion and Pricing Studies 18 Incorporation of Results in Applied Travel Models 24 CHAPTER 1 Research Objectives and Main Methodology 24 Three Levels of Specification 26 Incorporation of Results in Applied Travel Models 26 State of the Art and Practice in Modeling Congestion and Pricing 28 Highway Utility Forms in Different Demand Choice Frameworks 29 Major Focus for Improvement for Demand Analysis 30 Major Focus for Improvement for Network Simulations 32 CHAPTER 2 Review and Selection of Data Sources 32 Revealed Preference Data on Travel Demand 33 Generation of Network Level of Service and Reliability Measures 33 Stated Preference Data 36 Experimental Data 38 CHAPTER 3 Demand Model Specifications and Estimation Results 38 Structural Dimensions for Analysis of Congestion and Pricing Impacts on Demand 54 Route-Type Choice: Revealed Preference Framework (New York Model) 55 Time-of-Day Choice and Joint Time-of-Day and Route-Type Choice: Revealed Preference Framework (Seattle) 58 Mode and Car Occupancy Choice: Revealed Preference Framework 63 Joint Mode and Time-of-Day Choice: Revealed Preference Framework 70 Route Type, Time-of-Day, and Mode Choice: Stated Preference Framework 79 Other Choice Dimensions 89 CHAPTER 4 Network Simulation Procedures to Support Congestion and Pricing Studies 89 General Review and Recommended Methods of Network Simulation 102 Demonstration Using New York Regional Network 113 Summary of Network Modeling Procedures

114 CHAPTER 5 Incorporation of Results in Operational Models in Practice 114 Trip-Based Four-Step Demand Framework 115 Advanced Tour-Based, Activity-Based Demand Models 116 Static and Dynamic Traffic Simulation Tools 119 Integrated Demand and Network Models 125 Incorporation of Reliability in Demand Model 130 Incorporation of Reliability in Network Simulation 132 CHAPTER 6 Conclusions and Recommendations for Future Research 132 Impacts of Congestion and Pricing on Travel Demand: Behavioral Insights and Policy Implications 147 Network Simulation Models to Support Congestion and Pricing Studies 148 Incorporation of Results in Applied Travel Models 151 Recommendations for Future Research 160 Appendix A. Mathematical and Procedural References 176 References