Price elasticities of travel demand review and meta analysis

Institute for Transport Studies
FACULTY OF ENVIRONMENT

PRICE ELASTICITIES OF
TRAVEL DEMAND
REVIEW AND META-ANALYSIS
Professor Mark Wardman


MOTIVATIONS
• Why Review?
Price elasticities are important for policy and forecasting
Benchmarking and new insights
Several previous reviews and update needed

• Why Quantify Relationships (Meta-Analysis)?
Conclusions beyond a single study (eg, over time, method)
Exploit results outside public domain
Model can provide elasticity estimates where no evidence exists
Classic literature reviews emphasise means


BACKGROUND: PREVIOUS
REVIEWS
Numerous conventional reviews of price elasticities:
TRRL (1980), Goodwin (1992), Oum et al. (1992), Graham and Glaister
(2004), TRL et al. (2004), Wallis (2004), Litman (2010)
Goodwin (1992) - international evidence
50 bus fare elasticities from 21 studies
92 rail fare elasticities from 22 studies
120 car cost elasticities from 13 studies

Oum et al. (1992)
60 international studies of passenger demand
TRL et al. (2004) – local and suburban
33 UK studies and 11 Non UK studies of bus fare elasticities
35 UK and 20 Non UK rail fare elasticities


BACKGROUND: PREVIOUS
META-ANALYSES
A few previous meta-analyses covering price elasticities
Hensher (2008) international evidence (price, time, headway)
Meta model 319 observations from 39 studies

Holmgren (2007) range of public domain elasticities
81 for public transport price

Wardman and Shires (2003)
104 UK studies 1968-2002 and 902 PT price elasticities


DATA COVERAGE
• 167 UK studies 1957 to 2010 yielding 1633 price elasticities
Published as: Wardman, M. (2014) Price Elasticities of Surface Travel Demand: A Meta-analysis of UK Evidence. Journal of
Transport Economics and Policy, 48 (3), pp.367-384

• Follows on from major meta-analyses of:
1749 UK values of time from 226 studies
Published as: Abrantes, P.A.L. and Wardman, M. (2011) Meta-Analysis of UK Values of Time: An Update. Transportation
Research A 45 (1), pp. 1-17
427 UK time elasticities from 69 studies

Published as: Wardman, M. (2012) Review and Meta-Analysis of U.K. Time Elasticities of Travel Demand. Transportation 39
(3), pp. 465-490

• List independent variables


EXPLANATORY VARIABLES
• Multiple observations (elasticities) per study where appropriate
• Key segmenting (e.g. possible influential) variables are:
Type of data and sample size
Mode and cost numeraire
Periodicity (dynamic, static, indeterminate), time period, lag structure
Level of aggregation and model type
Distance, region and type of flow
Journey purpose and/or ticket type
Year
Source


SOME SUMMARY MEASURES
Car: 77 values from 27 studies
Rail: 1140 values from 102 studies
Bus: 377 values from 60 studies
Underground: 39 values from 11 studies
Times Series: Short Run 25%, Long Run 24%, Static 27%
Choice: RP 4% SP 7%
Other 13%
Urban 38% Inter-Urban 50% All 12%
1957-1970 4%
1971-1980 21%

1981-1990 19%
1991-2000 47%
2001-2010 9%


SUMMARY ELASTICITIES (I)
CAR

RAIL

BUS

Time Series/Panel SR

-0.30 (0.07)

-0.69 (0.02)

-0.45 (0.03)

Time Series/Panel LR

-0.66 (0.13)

-1.11 (0.03)

-0.62 (0.04)

Time Series/Panel Static

-0.35 (0.18)

-0.73 (0.02)

-0.36 (0.02)

Cross Sectional

-0.61 (0.20)

-1.01 (0.14)

-0.50 (0.04)

SP Choice

-0.20 (0.08)

-0.89 (0.07)

-0.58 (0.12)

RP Choice

-0.13 (0.02)

-0.57 (0.09)

-0.30 (0.03)

-1.23 (0.10)

-0.52 (0.06)

TP
Urban

-0.10 (0.03)

-0.76 (0.04)

-0.44 (0.04)

Inter-Urban

-0.19 (0.04)

-0.88 (0.02)

-0.69 (0.11)

All Distances

-0.39 (0.06)

-0.93 (0.04)

-0.72 (0.19)

SUMMARY ELASTICITIES (II)
CAR

RAIL

BUS

Business

-0.13 (0.05)

-0.62 (0.06)

-0.56 (0.14)

Commute

-0.16 (0.04)

-0.82 (0.19)

-0.35 (0.04)

Peak
Leisure

-0.12 (0.0)
-0.13 (0.02)

-0.34 (0.03)

-1.05 (0.12)

Off Peak

-0.41 (0.04)
-0.55 (0.04)

Season

-0.71 (0.03)

1st Class

-0.76 (0.06)

Standard Class

-0.94 (0.03)

Both 1st and Standard

-0.82 (0.02)

Full Fare (Peak)

-0.69 (0.06)

Reduced (Off-Peak)

-0.97 (0.06)

SUMMARY ELASTICITIES (III)

CAR

RAIL

BUS

1957-1970

-0.65 (0.39)

-0.33 (0.02)

1971-1980

-0.16 (0.04)

-0.81 (0.02)

-0.43 (0.03)

1981-1990

-0.47 (0.09)

-0.91 (0.04)

-0.51 (0.04)

1991-2000

-0.25 (0.07)

-0.85 (0.02)

-0.48 (0.02)

2001-2010

-0.13 (0.02)

-1.03 (0.11)

-0.53 (0.05)


MODEL FORM


META ANALYSIS RESULTS (I)
Variable

Coeff (t)

Effect

Variable

Coeff (t)

Effect

Data Type
Base=Static-Four
Static-Quarter
Static-Annual

n.s.

LR-Quarter(Quarter)

n.s.

-

- LR-Quarter(Annual)

n.s.

-

0.544 (9.2)

+72.3%

n.s.

-

0.388 (7.2) +47.4% LR-Annual

SR-Four

-0.144 (2.9)

-13.4% Monitor

SR-Quarter(Quarter)

-0.729 (4.3)

-51.8% Cross-Rail

0.483 (2.4)

+62.1%

SR-Quarter(Annual)

n.s.

- Cross-Bus

0.223 (2.0)

+25.0%

SR-Annual

n.s.

- RP Choice

n.s.

-

LR-Four(Four)
LR-Four(Annual)
LR-Four(FourAnnual)

0.345 (6.9) +41.2% SP
n.s.

- TP-Rail

0.539 (3.7) +71.4% TP-Bus

0.698 (8.5) +101.0%
0.793 (8.5) +121.0%
0.291 (1.6)

+33.8%


META ANALYSIS RESULTS (II)
Variable

Coeff ( t)

Effect Variable

Distance Category

Area Type

Base=Urban

Base=NonUrban

Coeff (t)

Effect

InterUrban-Rail

n.s.

- UrbanPTE-Rail

-0.521 (8.3)

-40.6%

InterUrban-Bus

0.228 (1.7)

+25.6% UrbanPTE-Bus

-0.260 (3.9)

-22.9%

InterUrban-CarTrips

0.571 (3.8)

+77.0% UrbanNonPTE-Rail

n.s.

-

InterNonLondon-Rail

-0.075 (2.2)

-7.2% UrbanNonPTE-Bus

-0.206 (2.7)

-18.6%

London-Rail

-0.466 (3.0)

-37.2%

London-Bus

n.s.

-


META ANALYSIS RESULTS (III)
Variable

Coeff (t)

Effect Variable

Mode and Ticket

Purpose

Base=Bus

Base=Commute-Peak

Car-Trips

-1.496 (8.4)

-77.6% Business

Car-Km

-0.744 (4.9)

-52.5% Leisure-OffPeak

Car-FuelCons

-0.557 (1.9)

-42.7% NonComm

Rail-Seasons

n.s.

Rail-First
Rail-Standard

-0.232 (3.2)
n.s.

- NonEB
-20.7% All

Coeff (t)

Effect

-0.574 (6.4)

-43.7%

0.270 (3.5) +31.0%
n.s.

-

n.s.

-

n.s.

-

- Car Cost

Rail-Both

-0.121 (3.2)

-11.4% Base=Fuel

Rail-Full

-0.158 (1.8)

-14.6% FuelParking

0.154 (1.5) +16.6%

+13.7% Total

0.568 (3.1) +76.5%

Rail-Reduced
UG

0.128 (2.0)
n.s.

-


META ANALYSIS RESULTS (IV)
 

 

 

 

 

 

Coeff (t)

Effect

-1.240 (3.0)

-1.240

 
 

Variable

Coeff (t) Effect Variable

Price Index

Car Ownership

LnPrice-Rail-NonSeason

0.179 (8.0)

0.179 LnCars-LeisKmFuel

LnPrice-Bus

0.068 (3.0)

0.068 Elasticity Type

LnPrice-Car

n.s.

- Base=FullElasticity

LnPrice-UG

n.s.

- ModeChoice-Leisure

Study Source
Base=Published
Unpublished

-0.099 (2.5) -9.4%

-0.276 (1.9) -24.1%


IMPLIED RAIL ELASTICITIES

Season

Short
PTE

Short
London

Short
Other

Inter
London

Inter
NonLon

SR

-0.18

-0.19

-0.31

-0.31

-0.28

Static

-0.31

-0.33

-0.52

-0.52

-0.48

LR

-0.36

-0.38

-0.61

-0.61

-0.57

-0.40 (-0.60)

-0.60

SR

-0.37

-0.39

-0.62

-0.62

-0.57

Static

-0.63

-0.66

-1.05

-1.05

-0.98

LR

-0.73

-0.77

-1.23

-1.23

-1.14

-0.70 (-0.85)

-0.80

-0.70 (-1.00)

-1.05

-1.20 (-1.00)

-1.10

-1.02

PDFH LR
Non
Season
First and
Standard

PDFH LR

-0.40 (-0.70) -0.60 (-0.75)

-0.60 (-0.90)

First

LR

Full

LR

-0.70

-0.74

-1.19

-1.19

-1.10

Reduced

LR

-0.94

-0.99

-1.58

-1.58

-1.47


IMPLIED CAR ELASTICITIES
Trips Urban
Business SR
Static
LR

DfT LR
Commute SR
and
Static
All
LR
DfT LR
Leisure
SR
Static
LR
DfT LR

-0.04
-0.07
-0.12

Trips
Inter
-0.07
-0.12
-0.21

-0.07
-0.12
-0.21

-0.12
-0.21
-0.36

-0.08
-0.13
-0.23

-0.14
-0.23
-0.41

Km

Fuel

-0.10
-0.12
-0.21
-0.37
-0.30

-0.15
-0.25
-0.45

-0.40


IMPLIED BUS ELASTICITIES

Commute

Leisure

Total

PTE

Urban

Inter

-0.34

London
& Rural
-0.42

SR

-0.32

Static

-0.55

-0.58

-0.71

-

LR

-0.64

-0.68

-0.83

-

SR

-0.42

-0.45

-0.55

-0.69

Static

-0.72

-0.76

-0.93

-1.17

LR

-0.84

-0.89

-1.09

-1.37

LR

-0.77

-0.82

-1.00

-

-


CONCLUSIONS
• Price elasticities critical in transport planning, policy and pricing
• Largest meta-analysis of price elasticities ever undertaken
• Summarises a number of key relationships
• Considerable practical value
• Methodological insights
• How do price elasticity meta-analysis findings fit with:

time elasticity meta-analysis evidence?
value of time meta-analysis evidence?

• Would be nice to extend to other countries!