Psychology and Pricing Policy



Psychology and Pricing Policy

Authors

L Harms, KiM Netherlands Institute for Transport Policy, NL; E van der Werff, University of Groningen, NL

Description

This paper gives an overview of psychological aspects of pricing policy.
It provides insight into the acceptance and effectiveness of different ways in which the kilometre price is implemented and designed.

Abstract

The KiM Netherlands Institute for Transport Policy Analysis has conducted a literature study into psychological aspects of pricing policy. The goal of the study was to provide insight into the acceptance and effectiveness of different ways in which the kilometre price is implemented and designed.
This has resulted in the following points of concern:

Type of payment and cost feedback
- Pay as you go (direct payment) is, according to expectations, highly effective in terms of conscious choice and behaviour, but it is not beneficial to the acceptance of pricing policy.
- Direct feedback creates a direct link between cause (driving a car) and effect (payment), which can increase the awareness of the costs for mobility (and thus also the effectiveness of the kilometre price).
- The retroactive invoicing of the costs is expected to be good for the acceptance, while a short term of payment in such a case is good for the effectiveness.
- Differentiating the costs for owning and using a car will make people more aware of paying for mobility. The effect of becoming aware will likely result in a subjective cost increase (even though there is none from an objective point of view).

Provision of information
- Resistance to the kilometre price seems to be fed primarily by ignorance, distrust and erroneous or selective interpretation of available knowledge.
- By informing people prior to the implementation of pricing policy through advertisements, brochures and websites, the acceptance and the effectiveness can be promoted.
- Providing insight into the consequences of the pricing policy for one?s personal situation can contribute to the acceptance and effectiveness of the kilometre price. This can be done, for example, through the use of so-called kilometre calculator, which would preferably be administered by an independent party.

Publisher

Association for European Transport