Household spending on transport in Latin America and the Caribbean: understanding transport expenditure patterns

In Latin America and the Caribbean (LAC), transportation constitutes one of the major items in the basket of goods and services consumed by households, accounting for around 12-17% of total expenses. Despite its importance, it is surprising the lack of evidence on transport expenditure patterns in the LAC region. This paper describes household spending on transport in the region, paying special attention to its evolution and differences explained by gender, age and income levels. Engel curves are estimated to understand the relationship between transport spending and changes in household income. Using income and expenditure surveys from 2003 to 2014 in 12 LAC countries – Bahamas, Bolivia, Brazil, Chile, Costa Rica, Ecuador, Honduras, Mexico, Nicaragua, Panama, Paraguay, and Uruguay – this paper finds a notable heterogeneity in transport spending in LAC and a region wide growth in private transport spending at that period. Results show that female head households tend to spend relatively less in private transport and that transport spending inequality is larger than total expenditure inequality proving that demand for private transport grows fast with income. Given that in LAC private transport tends to be a “luxury good†(demand increases more than proportionally than income), policies based on prices (such as congestion pricing or gasoline taxes) could be less effective than quantitative restriction policies when the policy objective is to reduce the growth of private vehicle ownership and use