IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v35y2001i9p807-821.html
   My bibliography  Save this article

The effect of income on car ownership: evidence of asymmetry

Author

Listed:
  • Dargay, Joyce M

Abstract

This paper examines the effect of income on car ownership, and specifically the question of hysteresis or asymmetry. Although there is little doubt that rising income leads to higher car ownership, less is understood about the effect of falling income. Traditional demand modelling is based on the implicit assumption that demand responds symmetrically to rising and falling income. The object of this study is to test this assumption statistically. Using a dynamic econometric model relating household car ownership to income, the number of adults and children in the household, car prices and lagged car ownership, income decomposition techniques are employed to separately estimate elasticities with respect to rising and falling income. The equality of these elasticities - no hysteresis - is tested statistically against the inequality - hysteresis - hypothesis. Various functional specifications are tested in order to assure the robustness of the results to assumptions concerning functional form. The estimation is based on cohort data constructed from 1970 to 1995 UK Family Expenditure Surveys, and a pseudo-panel methodology is employed. The results indicate that car ownership responds more strongly to rising than to falling income - there is a 'stickiness' in the downward direction. In addition, there is evidence that the income elasticity is not constant, but instead declines with increasing car ownership.

Suggested Citation

  • Dargay, Joyce M, 2001. "The effect of income on car ownership: evidence of asymmetry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(9), pages 807-821, November.
    • Handle: RePEc:eee:transa:v:35:y:2001:i:9:p:807-821
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965-8564(00)00018-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Golob, Thomas F., 1990. "The Dynamics of Household Travel Time Expenditures and Car Ownership Decisions," University of California Transportation Center, Working Papers qt1676t0bp, University of California Transportation Center.
    2. Dargay, Joyce & Gately, Dermot, 1997. "The demand for transportation fuels: Imperfect price-reversibility?," Transportation Research Part B: Methodological, Elsevier, vol. 31(1), pages 71-82, February.
    3. MacKinnon, James G. & White, Halbert & Davidson, Russell, 1983. "Tests for model specification in the presence of alternative hypotheses : Some further results," Journal of Econometrics, Elsevier, vol. 21(1), pages 53-70, January.
    4. Kitamura, Ryuichi & Bunch, David S., 1990. "Heterogeneity and State Dependence in Household Car Ownership: A Panel Analysis Using Ordered-Response Probit Models with Error Components," University of California Transportation Center, Working Papers qt0qv4q55r, University of California Transportation Center.
    5. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    6. Golob, Thomas F., 1990. "The Dynamics of Household Travel Time Expenditures and Car Ownership Decisions," University of California Transportation Center, Working Papers qt2t18b4q9, University of California Transportation Center.
    7. Goodwin, Phil, 1995. "Car Dependence," Transport Policy, Elsevier, vol. 2(3), pages 151-152, July.
    8. P.B. Goodwin, 1977. "Habit and Hysteresis in Mode Choice," Urban Studies, Urban Studies Journal Limited, vol. 14(1), pages 95-98, February.
    9. Dargay, Joyce & Gately, Dermot, 1999. "Income's effect on car and vehicle ownership, worldwide: 1960-2015," Transportation Research Part A: Policy and Practice, Elsevier, vol. 33(2), pages 101-138, February.
    10. Fred Mannering & Clifford Winston, 1985. "A Dynamic Empirical Analysis of Household Vehicle Ownership and Utilization," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 215-236, Summer.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gerard Jong & Ryuichi Kitamura, 2009. "A review of household dynamic vehicle ownership models: holdings models versus transactions models," Transportation, Springer, vol. 36(6), pages 733-743, November.
    2. Bhat, Chandra R. & Pulugurta, Vamsi, 1998. "A comparison of two alternative behavioral choice mechanisms for household auto ownership decisions," Transportation Research Part B: Methodological, Elsevier, vol. 32(1), pages 61-75, January.
    3. Kitamura, Ryuichi, 1990. "Panel Analysis in Transportation Planning: An Overview," University of California Transportation Center, Working Papers qt86v0f7zh, University of California Transportation Center.
    4. Cinzia Cirillo & Yangwen Liu & Jean-Michel Tremblay, 2017. "Simulation, numerical approximation and closed forms for joint discrete continuous models with an application to household vehicle ownership and use," Transportation, Springer, vol. 44(5), pages 1105-1125, September.
    5. Dargay, Joyce, 2007. "The effect of prices and income on car travel in the UK," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(10), pages 949-960, December.
    6. Dargay, Joyce & Hanly, Mark, 2007. "Volatility of car ownership, commuting mode and time in the UK," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(10), pages 934-948, December.
    7. Nayum, Alim & Klöckner, Christian A. & Prugsamatz, Sunita, 2013. "Influences of car type class and carbon dioxide emission levels on purchases of new cars: A retrospective analysis of car purchases in Norway," Transportation Research Part A: Policy and Practice, Elsevier, vol. 48(C), pages 96-108.
    8. Chen, Cynthia & Mokhtarian, Patricia, 2008. "A Review and Discussion of the Literature on Travel Time and Money Expenditures," Institute of Transportation Studies, Working Paper Series qt51d696jh, Institute of Transportation Studies, UC Davis.
    9. Amoh-Gyimah, Richard & Aidoo, Eric Nimako, 2013. "Mode of transport to work by government employees in the Kumasi metropolis, Ghana," Journal of Transport Geography, Elsevier, vol. 31(C), pages 35-43.
    10. Toepoel, V. & Das, J.W.M. & van Soest, A.H.O., 2008. "Relating Question Type to Panel Conditioning : A Comparison between Trained and Fresh Respondents," Discussion Paper 2008-4, Tilburg University, Center for Economic Research.
    11. Mohammed M. Gomaa, 2023. "Macro-Level Factors Shaping Residential Location Choices: Examining the Impacts of Density and Land-Use Mix," Land, MDPI, vol. 12(4), pages 1-18, March.
    12. Van Exel, N.J.A. & Rietveld, P., 2009. "Could you also have made this trip by another mode? An investigation of perceived travel possibilities of car and train travellers on the main travel corridors to the city of Amsterdam, The Netherland," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(4), pages 374-385, May.
    13. Whitehead, Jake & Franklin, Joel P. & Washington, Simon, 2015. "Transitioning to energy efficient vehicles: An analysis of the potential rebound effects and subsequent impact upon emissions," Transportation Research Part A: Policy and Practice, Elsevier, vol. 74(C), pages 250-267.
    14. Kroesen, Maarten, 2014. "Modeling the behavioral determinants of travel behavior: An application of latent transition analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 65(C), pages 56-67.
    15. Mokhtarian, Patricia L. & Chen, Cynthia, 2004. "TTB or not TTB, that is the question: a review and analysis of the empirical literature on travel time (and money) budgets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(9-10), pages 643-675.
    16. Matas, Anna & Raymond, José-Luis & Roig, José-Luis, 2009. "Car ownership and access to jobs in Spain," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(6), pages 607-617, July.
    17. Christy Collins & Arianne De Blaeij, 2005. "Trends in commuter and leisure travel in The Netherlands 1991-2001 - Mode choice and travel time," ERSA conference papers ersa05p615, European Regional Science Association.
    18. Matas, Anna & Raymond, Josep-LLuis, 2008. "Changes in the structure of car ownership in Spain," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(1), pages 187-202, January.
    19. Cynthia Chen & Jason Chen, 2009. "What is responsible for the response lag of a significant change in discretionary time use: the built environment, family and social obligations, temporal constraints, or a psychological delay factor?," Transportation, Springer, vol. 36(1), pages 27-46, January.
    20. Golob, Thomas F. & Kim, Seyoung & Ren, Weiping, 1996. "How households use different types of vehicles: A structural driver allocation and usage model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 30(2), pages 103-118, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:35:y:2001:i:9:p:807-821. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.