Affordability of public transport: a methodological clarification
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.
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IFS Working Papers
W94/11, Institute for Fiscal Studies.
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