The relationship between speed and income is established in a micro- economic model focusing on the trade-off between travel time and the risk of receiving a penalty for exceeding the speed limit. This is used to determine when a rational driver will choose to exceed the speed limit. The relationship between speed and income is found again in the empirical analysis of a cross-sectional dataset comprising 60.000 observations of car trips. This is utilised to perform regressions of speed on income, distance travelled and a number of controls. The results are clearly significant and indicate an average income elasticity of speed of 0.03; it is smaller at short distances and about twice as large at the longest distance investigated of 200 km.
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Paper provided by EconWPA in its series Urban/Regional with number
0405002.
Find related papers by JEL classification: R41 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Transportation: Demand, Supply, and Congestion
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