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Speed and Income

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  • Mogens Fosgerau

Abstract

The relationship between speed and income is established in a microeconomic 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 used to perform regressions of speed on income, distance travelled, and a number of controls. The results are clearly statistically significant and indicate an average income elasticity of speed of 0.02; it is smaller at short distances and about twice as large at the longest distance investigated of 200 km. © 2005 LSE and the University of Bath

Suggested Citation

  • Mogens Fosgerau, 2005. "Speed and Income," Journal of Transport Economics and Policy, University of Bath, vol. 39(2), pages 225-240, May.
    • Handle: RePEc:tpe:jtecpo:v:39:y:2005:i:2:p:225-240
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    References listed on IDEAS

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    1. Rienstra, S.A. & Rietveld, P., 1996. "Speed behaviour of car drivers: a statistical analysis of acceptance of changes in speed policies in the Netherlands," Serie Research Memoranda 0007, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    2. Gander, James P., 1985. "A utility-theory analysis of automobile speed under uncertainty of enforcement," Transportation Research Part B: Methodological, Elsevier, vol. 19(3), pages 187-195, June.
    3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
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    Cited by:

    1. Bonilla, David, 2009. "Fuel demand on UK roads and dieselisation of fuel economy," Energy Policy, Elsevier, vol. 37(10), pages 3769-3778, October.
    2. Etye Steinberg, 2022. "Run for Your Life: The Ethics of Behavioral Tracking in Insurance," Journal of Business Ethics, Springer, vol. 179(3), pages 665-682, September.
    3. McQuaid, Ronald W., 2009. "A model of the travel to work limits of parents," Research in Transportation Economics, Elsevier, vol. 25(1), pages 19-28.
    4. Borger, Bruno De, 2011. "Optimal congestion taxes in a time allocation model," Transportation Research Part B: Methodological, Elsevier, vol. 45(1), pages 79-95, January.
    5. Weber, Sylvain, 2019. "Consumers' preferences on the Swiss car market: A revealed preference approach," Transport Policy, Elsevier, vol. 75(C), pages 109-118.
    6. Muhammad Sabir & Jos Ommeren & Mark Koetse & Piet Rietveld, 2011. "Adverse Weather and Commuting Speed," Networks and Spatial Economics, Springer, vol. 11(4), pages 701-712, December.
    7. Muhammad Sabir & Mark Koetse & Jos Van Ommeren & Piet Rietveld, 2010. "Weather and Travel Time of Public Transport Trips," Tinbergen Institute Discussion Papers 10-029/3, Tinbergen Institute.
    8. Elvik, Rune, 2006. "Are individual preferences always a legitimate basis for evaluating the costs and benefits of public policy?: The case of road traffic law enforcement," Transport Policy, Elsevier, vol. 13(5), pages 379-385, September.
    9. Tscharaktschiew, Stefan, 2020. "Why are highway speed limits really justified? An equilibrium speed choice analysis," Transportation Research Part B: Methodological, Elsevier, vol. 138(C), pages 317-351.
    10. Muhammad Sabir & Jos van Ommeren & Mark Koetse & Piet Rietveld, 2008. "Welfare Effects of Adverse Weather through Speed Changes in Car Commuting Trips," Tinbergen Institute Discussion Papers 08-087/3, Tinbergen Institute.
    11. Klingen, Joris & van Ommeren, Jos, 2020. "Urban air pollution and time losses: Evidence from cyclists in London," Regional Science and Urban Economics, Elsevier, vol. 81(C).

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    More about this item

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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