An analysis of the determinants of local public transport demand focusing the effects of income changes

Purpose In order for public transport to be a part of the solution to the environmental problems caused by traffic there need to be a clear understanding of how, and to what extent, different factors affect demand. There still seem to be some confusion regarding some key relationships, one of them being the effect of income on public transport demand. The purpose of this article is therefore to provide empirical estimates of how different factors, including price and car ownership (although income being the main issue), affect the demand for local public transport. Methods In order to achieve the aim of the study, an econometric FD-model, allowing for unobserved effects, was estimated using panel data from Swedish counes from 1986 to 2001. Results The short-run (direct) elascies with respect to fare, vehicle-kilometres, income and car ownership were found to be -0,4, 0,55, 0,34, and -1,37 respectively. However, income affects public transport demand directly, and through its effect on car ownership, these effects works in opposite direction. Combining these it is found that total income effect is close to zero. Conclusions It is concluded that, although the findings of several previous studies suggests that demand for public transport might be falling with increased income, there is no evidence of such effects even when the full effect of changes in income (including changes in car ownership) is taken into account.