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Affordability of public transport: a methodological clarification

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  • Andrés Gómez-Lobo Echeñique

Abstract

There has been a surge of interest recently on the relation between poverty and transport policies. When analyzing the relation between poverty and transport, often the “affordability” of public transport is estimated. In this paper we present two alternative definitions of affordability used in the transport literature and discuss their limitations. Any affordability measure covering only transport expenditure is bound to be a very partial view of household welfare. In addition, the required affordability benchmark to determine whether transport costs are high or not is arbitrary. Therefore, the approach that uses the absolute level of these affordability measures is meaningless. We also show in this paper that the change in the affordability measures, as opposed to its absolute level, can be given a more rigorous interpretation in terms of traditional welfare economics. In spite of this last result, we argue that to analyze whether transport subsidies are meeting their social or distributional objectives it is much more fruitful to use traditional income distributional tools such as the relative benefit curve and its associated Gini coefficient.

Suggested Citation

  • Andrés Gómez-Lobo Echeñique, 2007. "Affordability of public transport: a methodological clarification," Working Papers wp261, University of Chile, Department of Economics.
  • Handle: RePEc:udc:wpaper:wp261
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    References listed on IDEAS

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    1. Banks, James & Blundell, Richard & Lewbel, Arthur, 1996. "Tax Reform and Welfare Measurement: Do We Need Demand System Estimation?," Economic Journal, Royal Economic Society, vol. 106(438), pages 1227-1241, September.
    2. Cropper, Maureen & Bhattacharya, Soma, 2007. "Public transport subsidies and affordability in Mumbai, India," Policy Research Working Paper Series 4395, The World Bank.
    3. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    4. Lewbel, Arthur, 1989. "Household equivalence scales and welfare comparisons," Journal of Public Economics, Elsevier, vol. 39(3), pages 377-391, August.
    5. World Bank, 2002. "Cities on the Move : A World Bank Urban Transport Strategy Review," World Bank Publications, The World Bank, number 15232.
    6. John Muellbauer, 1975. "Aggregation, Income Distribution and Consumer Demand," Review of Economic Studies, Oxford University Press, vol. 42(4), pages 525-543.
    7. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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