WELFARE IMPLICATIONS OF THE OMISSION OF INCOME EFFECT IN MODE CHOICE MODELS

Deals with the qualitative impact on welfare measures of the omission of income effect in mode choice models. To do this, in the next section the authors present a method of calculating the Hicksian measures of welfare (compensating or equivlaent variation) directly from market demands. Then they show that those measures can be viewed as comprising two parts, one representing an approximation of the Marshallian consumers' surplus variation, and one representing the effect of income on welfare. This result is applied to the analysis of the true benefits of modal price variations from mode choice models. The conditions under which users' benefits are underestimated at a mode choice level are established, with particular emphasis on the role of the (mode dependent) marginal utility of income. This is illustrated with an example using previously estimated figures. The role of income in the different levels of transport-related decisions is briefly discussed, and directions for future research are suggested.

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• Authors:
  • Jara-Diaz, S R
  • Videla, J L
• Publication Date: 1990-1

Media Info

• Features: References;
• Pagination: p. 83-93
• Serial:
  • Journal of Transport Economics and Policy
  • Volume: 24
  • Issue Number: 1
  • Publisher: University of Bath
  • ISSN: 0022-5258
  • Serial URL: http://www.jtep.com

Subject/Index Terms

• TRT Terms: Fares; Income; Mathematical models; Mode choice; Pricing
• Uncontrolled Terms: Welfare
• Old TRIS Terms: Modal selection
• Subject Areas: Economics; Highways; Public Transportation; Society;

Filing Info

• Accession Number: 00496827
• Record Type: Publication
• Files: TRIS
• Created Date: Aug 31 1990 12:00AM