The Relation Between Perceived and Actual Private Travel Costs – a Key Question for Efficient Modal Split

The Relation Between Perceived and Actual Private Travel Costs – a Key Question for Efficient Modal Split


Pernilla Ivehammar, Linköping University, Johan Holmgren, Linköping University


Travellers may not consider the full private cost when travelling by different transport modes. This study compares stated monetary cost and travel time with the actual costs and study implications of differences found for efficient modal split.


An economically efficient as well as a sustainable transport system are goals in Sweden (The Riksdag, 2009) as well as in the European Union (European Commission, 2013). Increasing the share travelling to work by bus instead of by car may be a way to achieve both goals. One way applied by the Public sector to do this is internalization of positive external effects with subsidies and internalization of negative external effects with taxes. Another possible market failure, not as much studied as external effects in the transport sector, is incomplete information in the form of inadequate perception of the private travel costs of different transport modes.

Travellers can be assumed to choose the travel mode that gives them the highest net benefit if they have complete information about the private travel costs by using different travel modes for their trips. The private cost of travelling by different modes consists of monetary costs as well as non-monetary costs. Monetary costs when travelling by car are the costs for the trip in petrol, maintenance costs and car depreciation, while the monetary cost when travelling by bus is the fare. Some monetary costs, as fares and the cost for petrol, are more direct and visible for the traveller (out-of-the-pocket) than other monetary costs, as car maintenance and car depreciation. A non-monetary private cost when travelling by car or by bus is the time spent travelling from door to door. If the travellers are aware of the full extent of both the monetary and the non-monetary costs they can make the best choices for them, restricted by the current design of the transport system and the transport policy applied. One possible market failure is that the travellers may not fully be aware of and take into calculation the full monetary cost when travelling by different transport modes, and that they may not be fully aware of the non-monetary cost in form of the actual time travelling by transport modes they not presently use.

A study in Sydney (Glazebrook, 2009) revealed that the “out-of-pocket” cost of car use is only one third of the total private costs and less than one sixth of the total cost, when also including external costs. The author points out that the “out-of-pocket” cost is the cost most likely to be perceived by the traveller and which will affect travel choices. Shiftan and Bekhor (2002) studied the individual perception of car travel costs by commuters. They did found a large standard deviation from the too low mean stated travel cost and concluded that travellers are uncertain about the private travel costs and may only take fuel costs into account.

The relation between the perceived and actual private travel costs can be studied by comparing the stated monetary cost and travel time when travelling by different transport modes with the actual costs. The aim of this study is to study this for car and bus based on more than 800 answers in an already completed combined RP- and SP-study about actual and potential travel to work in the midsized town of Linköping in Sweden. The study is part of a project financed by the Swedish Energy Agency, aiming at finding measures to increase energy efficiency in the transport sector. The project studies under which conditions individuals are willing to use environmentally friendly modes of transport in urban areas and which policy measures could be used to stimulate a switch from private car to other modes.

The method in this study will be to compare respondents’ answers to questions about their monetary cost and travel time with car and bus when travelling to work within 10 km away with an estimation of the actual costs for the same persons. One tested hypothesis will be that travellers not travelling by bus overestimate the travel time by bus. Another tested hypothesis will be that those travelling by car underestimate the monetary cost travelling by car. If any of these hypotheses will be found to be confirmed the implications of the findings will be analysed with considerations of results from the estimated RP- and SP-models of choice of transport mode in Holmgren, Ivehammar (forthcoming). Such possible findings may mean that information from the Public sector to citizens could be an inexpensive way to decrease these distortions and increase the share travelling by bus instead of travelling by car to work, at the same time achieving improved economic efficiency and a more sustainable transport system.


Association for European Transport