BUS FARE ELASTICITIES A Literature Review

Report to the Department of the Environment, Transport and the Regions

Mark Hanly and Joyce Dargay

April 1999

1. INTRODUCTION
This report is the first stage of a project on bus fare elasticities being carried out for the Department of the Environment, Transport and the Regions. The aim of this paper is to review the most recent literature on bus fare elasticities. Most studies prior to 1990 are summarised in Goodwin (1992) and Oum et al (1992) and this section will present the main results of these summaries complemented with more recent evidence. When setting out the scope of this literature review, it was decided to focus on those studies which answer questions under investigation in this project (in so far as is practicable). Specifically, in this project we seek to address the following questions: a. b. c. d. e. f. g. h. i. short- and long-term elasticities relationship between bus fares and car travel variation in elasticities across areas fare increases combined with quality improvements asymmetric price response differences in elasticities for small and large price changes relationship between the elasticity and the fare level aspects to be considered in elasticity estimation differences in elasticities between cash fares, flat fares, off-peak discount schemes, travel cards, etc.

In the literature review, we have found studies that investigated some but not all of these questions. For example, there has been increasing interest in the dynamics of response to fare and other price changes in public transport demand literature since the mid- to late 1980s. There has also been considerable interest in the effects of public transport and car prices both on use of the former, and on ownership and use of the latter. Similarly, a number of studies have considered the effects of different tariff structures and the impact of service quality on patronage. Less work has been done to explicitly assess the impacts of large and small fare changes, and this has generally been done using before-and-after survey analysis. However, while recent work by Dargay has looked at the asymmetric price response for car use and ownership and energy use, little if any of this kind of analysis has been done in the field of public transport demand. The literature survey presented here has focused mainly on work that has been similar in nature to that of the project in hand i.e. where possible using revealed preference time series data and econometric analysis. For comparison, results of some studies using other kinds of data and/or analytical techniques are presented when it is felt that they are relevant and add to the discussion.

2. EVIDENCE FROM LITERATURE REVIEWS

The influential review of public transport elasticities edited by Webster and Bly (1980) concluded that a reasonable rule of thumb for public transport fare elasticity was -0.3. This figure was widely acknowledged to be correct for much of the 1980s. However, towards the

beginning of the 1990s, it was starting to look as if there was a drift upwards in the fare elasticity to somewhere in the range -0.3 to -0.4 or more. Two wide ranging reviews of public transport demand studies, the first by Goodwin (1992) and the second by Oum et al (1992) between them summarised most of the elasticity studies prior to 1990 and in the process updated the work of Webster and Bly (1980). Goodwin (1992) reviewed 50 demand elasticities for bus use, based on studies for the UK and elsewhere, and calculated a nonweighted average of -0.41. His summary table of elasticity values classified by type of study and time period covered by the studies (either explicitly or implicitly) is reproduced here.

Table 1: Bus fare elasticities related to time period. Goodwin (1992).

Type of study Before and after Explicit short Unlagged time series Explicit long Equilibrium models Time period around 6 months 0-6 months 0-12 months 4+ years 5-30 Average Elasticity -0.21 -0.28 -0.37 -0.55 -0.65 Standard Deviation 0.12 0.13 0.18 0.20 0.18 No. in Sample 3 8 24 8 7

Goodwin concludes that it would make sense to consider the static elasticity figure of -0.3 from the Webster and Bly (1980) review as a reasonable figure for the effects within the first year; that the effect after four years or so (the medium term) would be -0.55; rising to -0.65 over a period of about a decade. Overall there is a clear pattern for long-term elasticities to be between 50 per cent and three times higher than the short term. Concerning the relationship between car ownership and public transport, Goodwin concludes that the results in Bates and Roberts (1979, 1981) and Copley and Lowe (1981) give broad support to an elasticity of car ownership with respect to public transport service level of about -0.1. He concludes that the elasticity of car ownership with respect to public transport generalised costs is not likely to be less than +0.1, or more than about +0.3, implying a rather small figure of less than +0.1 for fares alone. The corresponding table from Oum et al (1992) is reproduced in Table 2 below. Most of the studies cited relate to North and South America and to Asia, and no distinction is made between short- and long-run elasticities. Again a wide range of elasticity estimates can be seen. The elasticities given relate to peak and off-peak traffic separately, and to total patronage. The first column of the table shows the own-price elasticity of the demand for transport, i.e. transport by all modes. The mode-choice elasticities give the fare-elasticity of bus travel, holding total transport demand constant. These differ from the ordinary demand elasticities considered thus far in that they only take into account the effect of fare changes on substitution between modes, but not on total travel. They can therefore be considered as a lower bound for ordinary elasticities. The final column presents a most-likely range of total fare elasticity estimates based on the authors own subjective consideration of the studies reviewed. In general, the ranges are quite broad, reflecting the diversity of the countries and models used. However, it does seem that some tentative conclusions could be drawn. Particularly, off-peak traffic is more price sensitive than peak traffic. This is as would be

expected, since peak traffic is essentially work and school trips, which are less easy to forgo than off-peak leisure or shopping trips. Table 2: Bus fare elasticities from discrete choice models. Oum et al (1992).
Total transport demand cost elasticity 0.00 -1.08 to -1.54 -0.10 to -1.62 Mode choice fare elasticity -0.03 to -0.58 -0.01 to -0.69 -0.03 to -0.70 Total fare elasticity Most likely range -0.10 to -0.70 -0.10 to -1.10 -0.10 to -1.30 No. of studies 6 3 11

Peak Off-peak All day

Fowkes et al (1992), review the existing literature for evidence on possible differences in price-sensitivity for different trip purposes. They consider previous reviews by Oum etal (1990), Kemp (1973) and Goodwin (1988). The suggested average own-price elasticities are shown in Table 3. The results confirm those above the fare elasticity for leisure trips (generally off-peak) is twice that for commuting and business trips (generally peak). Again, no distinction is made between the short and long run.

Table 3: Fare elasticities by trip purpose. Fowkes et al (1992).

Trip purpose Commuting Business Leisure Own-price elasticity -0.3 -0.3 -0.6

3. EVIDENCE FROM THE UK

Work by Gilbert and Jalilian (1991) on travel demand elasticities in London yield values that are considerably higher in absolute value than those in the majority of previous studies reviewed in Goodwin (1992) and Fowkes et al (1992). This is particularly true for the shortrun elasticity. However, the relationship between short- and long-term values is consistent with the other studies: the long-run elasticity is 50% higher than the short-run elasticity. Their results are reproduced in Table 4. A point to note for this latter study is that the elasticities were derived under conditions whereby prices of all other modes were assumed to be held constant.

Table 4: Bus fare elasticities for London. Gilbert and Jalilian (1991).
Elasticity -0.8 -1.2 to -1.3

Short term Long term

Bus fare elasticities for London were also estimated by London Transport in 1987 and 1992. The results are summarised in Table 5. The own-price fare elasticities give the change in demand if only bus fares change, while the conditional elasticities give the effect on bus demand if bus, underground and BR fares all change by the same proportion. Here the medium term refers to around one year and the short term implies the immediate effect. The two studies produce rather similar results, although the own-price elasticity is somewhat greater in the more recent study. As expected, the conditional elasticities are smaller in absolute value than the own-price elasticities, reflecting the substitution between modes. The cross-price elasticities are positive, but small. It should be stressed, however, that these are immediate effects, and that we could expect the medium- and long-term elasticities to be far greater. The 1987 study also estimates a service elasticity, which is of a magnitude comparable to other studies. Table 5: Bus fare elasticities for London. London Transport (1987 and 1992).
Elasticity Own-price Conditional own-price Cross-price: Underground fares BR Fares Service elasticity 1987 Medium term -0.40 -0.27 +0.10 +0.38 1992 Medium term -0.62 -0.35

Short term -0.46 -0.20 +0.14 +0.13

In their report for the London Congestion Charging project for the Department of Transport, Halcrow Fox (1993) undertook a stated preference study of travel demand elasticities. The values obtained for buses for different trip purposes and income groups are shown in Table 6. Both normal price elasticities relating to fare only and generalised cost elasticities including travel time costs etc. are presented. Clearly, the generalised cost elasticities are greater than those relating to fare only. Two major conclusions are apparent from the figures given. Firstly, the higher income groups are more sensitive to bus fares and to generalised costs. This could be explained by the fact that a larger proportion of this group has access to a car as a substitute mode, and that they have a higher value of time. Secondly, non-work related trips are far more price-sensitive than are work-related trips either for commuting or employers business. This is explained by the necessary nature of the latter trips. Table 6: Recommended public transport own-price elasticities for London. Stated Preference results. Halcrow Fox (1993).
Low Income -0.2 to -0.4 -0.4 to -0.6 Price Elasticities Medium High Income Income -0.3 to -0.4 -0.4 to -0.5 -0.5 to -0.7 -0.6 to -0.8 -0.3 to -0.4 Generalised Cost Elasticities Low Medium High Income Income Income -0.4 to -0.5 -0.5 to -0.7 -0.6 to -0.8 -1.3 to -1.5 -1.4 to -1.6 -1.5 to -1.7 -0.6 to -0.8

Home-Work Home-Other Employers business

Preston (1998) in a study of bus fare elasticities in three different metropolitan areas in England concludes that the use of a global aggregate price elasticity masks the complexity of the urban public transport market and recommends the use of a more disaggregate approach to modelling urban public transport elasticities. He investigated different types of variation: (a) by time of day/day of week; and (b) by user and ticket type, using a log-linear least squares model in both cases. The main results are reported below. Variation by time of day/day of week The study broke the data into the following time periods: early morning, peak morning, peak evening, inter-peak, late evening, Saturday and Sunday. The resulting fare and service elasticities are shown in Table 7. It can be seen that bus fare elasticities are lowest in absolute terms for early morning, peak morning, peak evening and Saturday travel, with a long-run elasticity of -0.3, and highest for evening and Sunday travel, with a corresponding elasticity slightly in excess of 1.0. On average, the long-run elasticity is about 50% higher than the short-run elasticity, but this varies for the different periods from 35% higher for Saturday traffic to over 400% higher for evening traffic. It would appear that adjustment to fare changes occurs most rapidly for Saturday travel and most slowly for evening travel, while the most substantial short-run effects relate to Sunday traffic. Generally, the results are as expected necessary travel to work and school at peak hours is much less price-sensitive than leisure and shopping trips which are generally off-peak and on weekends. The low elasticities on Saturdays may reflect the more-necessary shopping trips made to the city centre on this day. For all periods, the study yielded a fare elasticity of -0.78. Table 7: Bus fare and service elasticities by time of day/week for English Metropolitan areas. Preston (1998).
Fare elasticity Early morning and peak Inter-peak Evening Saturday Sunday All periods Short run -0.16 to -0.20 -0.31 -0.19 -0.20 -0.69 Long run -0.24 to -0.31 -0.55 -1.06 -0.27 -1.06 -0.78 Service elasticity Short run 0.38 0.17 0.35 0.52 1.05 Long run 0.58 0.30 1.95 0.67 1.61 0.13

Regarding the service elasticities, we find that these were lowest in the inter-peak period, higher in the peak periods, yet higher on Saturdays and higher still on Sundays and evenings. Notably, the highest service elasticities (1.95 in the long run) are found for the time periods with the highest fare elasticities. It should be noted, however, that all of the elasticity figures quoted have quite wide confidence intervals, so that some of the differences between timeperiods may not be statistically significant at normal confidence levels. Apart from the above-mentioned elasticities, the study attempts to estimate the effect of car ownership on bus travel. Car ownership was found to have a statistically significant effect on demand only on weekdays before 9 am and on Saturdays.

Variation by user and ticket type As in previous work in this area, Preston focused on the differences between children, adults, and the elderly and disabled. The resulting elasticities, along with their 95% confidence intervals, are shown in Table 8. The elderly and disabled cash fare elasticity is -0.29 and that of adults is -0.28. Both are consistent with the adult value of -0.3 in the study by Goodwin, Hopkin and McKenzie (1988). The child cash fare elasticity is higher at -0.40. For adult prepaid tickets, the fare elasticity is higher yet at -0.74. The latter two results, however, have extremely wide confidence intervals. For part of the period investigated, the elderly and disabled had zero fares in off-peak periods. One problem with the log-linear model is that it forecasts infinite demand at zero price. To overcome this Preston estimated an alternative model using non-linear least squares. For peak travel, this yielded a short-run elasticity of -0.11 rising to -0.30 in the long run. The comparable elasticities for inter-peak travel were -0.23 and -1.47.

Table 8: Bus fare elasticities by user, ticket type and peak/off-peak travel for English Metropolitan areas. Preston (1998).
Cash fare Medium term -0.28 (0.12) -0.40 (0.39) -0.29 (0.07) Pre-paid ticket Medium term -0.74 (0.39) Peak Short run Off-peak Short run

Long run

Long run

Adults Children Elderly/disabled All

-0.11

-0.30

-0.23

-1.47

Preston also quotes results from the ISOTOPE (1997) study of variation of elasticity by city size in which data from 89 European cities were analysed. The results from the study suggest that bus fare elasticities are greater in small cities (those with a population of less than 0.5 million) than in large ones (-0.50 in comparison to -0.34). This contrasts with the conclusion of Webster and Bly (1980) for North American cities which found the opposite to be true. Preston puts forward the argument that the lower fare elasticity in large European cities may reflect a combination of passengers greater captivity to public transport because they travel longer distances in general than those in smaller cities (and hence alternatives such as walking and cycling are less attractive), and the greater congestion and parking problems in large cities which makes travel by car less attractive. The same study also indicates that service elasticities are greater in large cities than in small cities (0.49 and 0.33 respectively). A possible explanation for this may be that there is greater modal competition in larger cities. Normally fares for all modes change proportionally, whereas service changes in public transport modes are not proportional, in general. The greater service elasticity in larger cities would therefore reflect the greater service competition between public transport modes.

4. EVIDENCE FROM EUROPE AND AUSTRALIA

A study of bus trip demand in 11 Spanish cities by de Rus (1991) estimated both dynamic and static demand models. In the dynamic model, the short-term own-price elasticity for bus fares (all ticket types together) ranges from -0.06 to -0.39 with an unweighted average of -0.28 and the corresponding range of long-term elasticities is -0.09 to -0.48. The long-run elasticities are of the order of 1.2 to 2 times the magnitude of the short-run values. In the same paper, he also estimated both dynamic and static models in which cash-fare tickets and multi-ride tickets are disaggregated, but reported only the results for the static model. The direct elasticities for cash fares lie in the range -0.7 to -1.2, while the range for multi-ride tickets is considerably wider. As expected, the individual ticket types are more price-sensitive than is the aggregate, which reflects the substitution between the two types of ticket. The effects of increasing both fare types equiproportionally are shown in the final column. In general, it appears that this would be to the relative advantage of the multi-ride ticket, and may even result in an absolute increase of the use of such tickets. The paper also presents service elasticities. These are positive, confirming that service quality has a positive impact on bus patronage. However, the effect is quite variable with a range from 0.39 to 1.88 in the long run for the different cities. Table 9: Bus fare and service elasticities. Spanish cities. de Rus (1991).
Elasticity Own-price Cash fare Multi-ride ticket Service Short-term -0.06 to 0.39 -0.73 to 1.16 -0.27 to 2.25 0.26 to 1.54 Long-term -0.09 to 0.48 -0.39 to 0.53 -0.21 to +0.44 0.39 to 1.88 Equiproportional Price changes

In their study of public transport demand in Finland, Dargay and Pekkarinen (1998) estimated the short- and long-term own-price elasticities for three types of bus ticket using monthly data over the period April 1993 to October 1996 for individual Finnish districts. The ticket types are: (a) regional bus cards (RBC) - a popular form of bus subsidy in Finland - which are valid on all buses operating in a particular region and for all bus trips in the region; (b) a 40 trip ticket - this is a subsidised ticket valid for 40 trips of a given distance on one route; and (c) single trip tickets. The results are reproduced in Table 10. Regarding fare elasticities, the results suggest that the demand for regional bus cards is more price sensitive than are trips made by bus cards. An increase/decrease in card price increases/decreases the number of trips made per card, suggesting that a price increase/decrease encourages less-frequent users to abandon/start purchasing bus cards. The closest substitute fare, the 40-trip ticket, has a positive influence on the number of RBCs sold, but a negative impact on the number of trips made per RBC as the price of the 40-trip ticket increases relative to that of the RBC, more RBCs are purchased, but these are used less, since the RBC becomes economically attractive to even less frequent users. The two effects more-or-less cancel out, however, so the impact on total trips by RBC is negligible. Finally, if the prices of both ticket types increase equiproportionally, the demand for RBCs and trips by RBC decline substantially, but the number of trips made per card declines only marginally.

Table 10: Elasticities of the demand for regional bus cards and trips in Finland. Dargay and Pekkarinen (1998).
Regional Bus Cards Own price Price of 40 trip ticket Equal % change in prices Service Petrol price Short run -0.9 0.3 -0.6 0.1 Long run -1.3 0.4 -0.9 0.2 Trips per Card Short run 0.3 -0.3 0.0 0.5 Long run 0.4 -0.5 -0.1 0.7 Trips by Regional Bus Card Short run Long run -0.5 -0.9 -0.5 -0.9 0.6 1.1

The service elasticity is found to be positive, but rather small, and affects mainly card puchases, rather than trips per card. The petrol price, on the other hand, has a more substantial impact on the number of trips made per card than on the number of cards purchased. The same study also estimates own- and cross-price elasticities for trips by different fare types in the Finnish cities of Oulu and Kuopio. The results, given in Table 11, indicate that trips by 40-trips tickets are less-price sensitive than those made by other ticket types. Significant cross-fare elasticities, however, were only found in a few cases. Again, there is a substantial difference between short- and long-run elasticities, with the long-run values being 2 to 3 times those in the short run. Table 11: Summary of elasticities for different ticket types in two Finnish cities (Oulu and Kuopio). Dargay and Pekkarinen (1998).
Trips by Single Ticket Short run Long run -0.3 -0.9 0.1 0.5 Trips by 40-trip ticket Short run Long run 0.9 1.4 -0.3 -0.5 Trips by Regional Bus Card Short run Long run -0.4 -0.8

Fare type: Single ticket 40-trip ticket RBC City ticket

An important point to note is that since the models are estimated on a combination of crosssection and time-series data, and since most of the variation in the sample is due to differences between the communities, the short-run elasticities do not represent the response within the first month to changes in the explanatory variables, but instead some intermediate term effect. Similarly, the long-run elasticities may not capture the true equilibrium response, since the estimates are based on monthly data for a relatively short time period and on a lag of a single month. Hensher and King (1998b) estimated elasticities for concession and non-concession markets segmented by trip length in the Australian city of Newcastle. They focus on buses and cars only and use a random effects heteroskedastic extreme value model (HEVL) to jointly estimate stated preference and revealed preference data. The existing ticketing system consists of three ticket types: (a) single journey tickets; (b) a 10-trip TravelTen ticket allowing users 10 one-way trips over an agreed number of sections; and (c) a weekly TravelPass allowing

passengers an unlimited number of trips over a seven day period within specified sections. The authors consider two possible future scenarios: (a) scenario I - replacement of the existing system with a system of 4 timed tickets (one-hour, four-hour, one-day and weekly); and (b) scenario II - introduction of the four timed tickets and retention of the single trip ticket from the current system. Short and long trips are considered and the authors distinguish between non-concession holders and concession holders/non-pensioners. The results for Scenario I are summarised in Table 12. The models are estimated on the basis of cross-section data, and no mention is made of time horizon. Table 12: Bus fare elasticities by ticket type for Newcastle, Australia. Scenario I. Hensher and King (1998a).
1-hour ticket Own-price elasticity Short trips Concession Non-Concession Long trips Concession Non-Concession Cross-fare elasticities Short trips Concession Non-Concession Long trips Concession Non-Concession Cross-price: motoring costs Short trips Concession Non-Concession Long trips Concession Non-Concession -1.15 -1.52 -0.30 -1.20 0.27 to 0.30 0.39 to 0.43 0.07 to 0.09 0.25 to 0.38 0.30 0.28 0.06 0.23 4-hour ticket -1.17 -1.01 -0.46 -1.29 0.28 to 0.30 0.21 to 0.42 0.10 to 0.17 0.31 to 0.37 0.30 0.09 0.09 0.26 Day ticket -1.83 -1.24 -0.55 -1.77 0.37 to 0.60 0.32 to 0.40 0.04 to 0.33 0.42 to 0.54 0.42 0.20 0.08 0.35 Weekly ticket -1.30 -1.45 -1.02 -1.62 0.29 to 0.33 0.30 to 0.48 0.20 to 0.28 0.40 to 0.45 0.37 0.27 0.30 0.35

The wide variation in elasticities for different ticket types, trip lengths and patrons is apparent. The own-price elasticity ranges from -0.3 to nearly -1.8, and the cross-fare elasticities from 0.04 to 1.4. Although, not totally consistent, a few general trends can be noted: the day ticket seems to be most price-sensitive in the majority of cases, while the 1-hour ticket is least priceresponsive; non-concessionary fares appear more price-sensitive than concessionary fares; short trips are more price sensitive for concessionary patrons than are long trips, while the opposite seems to be the case for non-concessionary patrons. Finally, the elasticities with respect to motoring costs are generally quite low, falling between 0.06 and 0.42. For long trips, these are higher for non-concessionary patrons than for concessions, but the opposite appears the case for short trips. Comparing the motoring cost elasticities for short and long trips, no trends are discernible. The study also investigates the effects of bus fares on car travel. In general, the elasticities are very small, averaging around 0.04 for the individual ticket types.

In another recent paper Hensher (1998a) estimates direct- and cross-share elasticities for the Sydney Metropolitan area, again using SP and RP data and HEVL and MNL methodologies and distinguishing between mode (train, bus and car) and ticket type (single cash fare, weekly train or bus card, and bus and train travel passes). The results of direct interest to the current project are reported in Table 13. As in the previous study, no mention is given to time horizon. Here we find that the elasticities are much lower than those in the previous table, and also rather lower than those found in other studies. The single ticket appears to be more price sensitive than the other ticket types, and motoring costs have little effect on bus demand. The two estimation methods produce rather different elasticities, which are generally lower using the MNL method. Table 13: Fare elasticities for trips by different ticket types in Sydney, Austrailia. Hensher (1998a).
Single ticket own-price elasticity HEVL method MNL method Motoring costs cross-price elasticity HEVL model MNL model -0.36 -0.14 0.07 0.05 Travel ten ticket -0.16 -0.02 0.02 0.01 Travel pass -0.10 -0.01 0.00 0.02

Tegner, Loncar-Lucassi and Nilsson (1998) estimated a two-stage aggregate non-linear time series demand share model for public transport trips in Stockholm to investigate the elasticities for different types of ticket (single ride ticket, multi-ride ticket, etc.) over the period 1973 to 1996. The three main types of ticket sold by the Stockholm Greater Transit Company are monthly cards, pre-paid coupons (strips) and cash-paid coupons. A share model is used and the results are presented in terms of share price elasticities, i.e. the percentage change in the share of a given ticket type resulting from a percentage change in its price. These are summarised in Table 14, and relate to the medium term. The share elasticities are not the same as normal price elasticities, and further information is required to convert them to elasticities comparable to those of other studies. This is only done for the case of monthly cards, for which a fare elasticity of 0.35 is obtained. The share elasticities for the different ticket types, however, can be compared directly to determine relative fare sensitivity. From the results shown, cash coupons are the most price-sensitive fare type, while monthly cards are least sensitive. The same study also estimates service elasticities and the cross-elasticity with respect to petrol prices for total public transport demand. The service elasticity is found to be 0.29 and the cross-elasticity with respect to the petrol price, 0.15. Table 14: Elasticities by ticket type in Stockholm. Tegner, Loncar-Lucassi and Nilsson (1998).
Ticket Type Monthly cards Cash coupons Pre-paid coupons Average share elasticity -0.2 -1.8 -0.8

10

Alexandersson et al (1998) estimate the effects of deregulation of the bus industry on bus travel in Sweden. Data on annual bus passengers on a county level over the period 1987 to 1993 are used to estimate a static logarithmic model for aggregate bus demand. The own-price elasticity obtained, -0.23, is low in comparison to results from other countries. The authors believe that this may be due to a number of factors including the high (50%) fare subsidy provided by the Swedish government and the fact that many counties in Sweden do not have a separate system of school buses. In their recent review of transport elasticities for public transport demand, Nijkamp and Pepping (1998) compared 12 studies from four European countries (Finland, the Netherlands, Norway and the United Kingdom) in order to assess the factors that influence the sensitivity of travellers to public transport travel costs in Europe. They use meta-analysis, a statistical procedure for combining and comparing research findings from different studies focusing on similar phenomena. It is particularly useful in cases where there are no controlled conditions, such as in comparing elasticity estimation studies which have been carried out independently and for different areas and conditions. A summary table of their information survey containing (the eight) site- and study-specific characteristics of the various studies used in their analysis is reproduced here in Table 15. It is clear from this table that the range of elasticity values is quite wide, from a low of -0.15 in the UK study to a high of -0.8 in one of the studies for the Netherlands (Fase, 1986). The time scale to which the elasticities pertain is not explicitly stated, but it can generally be assumed that those based on cross-section data and the higher of the two given for time-series data represent a longer-term response. There is also considerable diversity in modes included, type of data (e.g. aggregated time series data, aggregated cross-section data, before-and-after survey data, stated preference data, model-based elasticities), methods of estimation (e.g. random utility model, logit model, nested logit, linear demand OLS, discrete choice), amount of data used in estimation, and geographical location and specificity. This is, of course equally true of the results from the other studies cited in this literature review. Nijkamp and Peppings analysis broadly supports the main findings from existing reviews - i.e. the importance of the difference between aggregated, empirical-based research methods and disaggregated choice models as well as of the model assumptions and the number of competitive modes. In addition, they find that country-specific factors have a strong influence on elasticity size. For example the natural circumstances and travel distances in a country may influence the mode of travel that is chosen (they cite the bicycle in Holland). They advise that care should thus be taken when comparing elasticities for different European countries even when the estimation methods are the same.

11

Table 15: Survey of elasticities for public transport in four European countries. Nijkamp and Pepping (1998).
Source Country Data period 1988 1995 1966-90 1984-85 1980-86 1950-80 1965-81 1986 1977-91 1990-91 1991-92 1991 Modes Indicator of demand Trips Trips Person-km Trips Trips Person-km Person-km Person-km Person-km Trips Trips Trips Geographical coverage Urban Urban Urban, interurban Urban, semi-urban Urban, semi-urban Urban, semi-urban Urban Semi-urban Urban, semi-urban Urban Interurban Urban, interurban Number of competitive modes 2 3 1 2 2 1 1 2 2 3 5 4 Data Type CrossSection CrossSection Repeated Crosssection Panel Time Series Time Series Time Series CrossSection Time Series CrossSection CrossSection Crosssection Model type Nested logit Logit Linear demand OLS Linear demand OLS Linear demand OLS Linear demand OLS Linear demand OLS Discrete choice Translog utility function Multinomia l logit Multinomia l logit Nested logit Elasticity value -0.48 -0.56 -0.75 -0.35/ -0.40 -0.35/ -0.40 -0.51 -0.53/ -0.80 -0.77 -0.74 -0.40 -0.63 -0.15

EXTRA* EXTRA Sullstrm EXTRA BGC, 1988 Roodenburg , 1983 Fase, 1986 Gunn, 1987 Oum, 1992 EXTRA EXTRA EXTRA

Finland Finland Finland Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Norway Norway UK

Bus, tram, metro, train Bus, tram, metro, train Bus, tram, metro, train Bus, tram, metro Bus, tram, metro Bus, tram, metro Bus, tram, metro Train Bus, tram, metro Bus, tram, metro, train Bus Bus, tram, metro, train

* These results are from the EXTRA project for the European Commission.

5. CONCLUSIONS
Despite the diversity of the elasticities obtained from the individual studies, a few general conclusions can be drawn. Short- and long-run elasticities

There is a substantial difference in the response to fare changes in different time perspectives. The evidence suggests that long-run elasticities are between 1.5 to over 3 times higher than the short-run elasticities. From the empirical evidence, it appears that a likely value for the short-run (one year) average fare elasticity is around 0.3. There is far more uncertainty concerning the long-run elasticity, however, with a probable range from -0.5 to -1.0.

12

Differences in elasticities by trip purpose and time of day

Commuting trips are less responsive to fare changes than other trips. Similarly, peak travel is less price-sensitive than off-peak travel. The elasticity for leisure and other off-peak trips is about twice that for commuting, peak-time trips. Difference in elasticity between different groups

Higher income groups seem to be more sensitive to changes in bus fares, and nonconcessionary patrons more responsive than concessionary patrons. Again, however, the empirical evidence is limited. Difference in elasticities for different fare types

Trips by individual fare types are more price-sensitive than total trips, reflecting the substitution between fare options. There is a wide variation in elasticities for different ticket types, but these differ from place to place and no general conclusions can be drawn. Service elasticities

Service quality, generally measured in terms of bus-kilometres, is found to have a positive impact on ridership, although the elasticities differ substantially from study to study. Off-peak travel appears to be more responsive to service changes than peak travel. Relationship between car and bus travel

Although the empirical evidence is limited, bus fares appear to have negligible effects on car travel. The effects of motoring costs on bus travel, however, are slightly greater. In light of the discussion in Nijkamp and Pepping (1998) and Oum et al (op. cit.), estimated elasticities from different studies are not directly comparable. Even allowing for the distinction between mode choice elasticities and market demand elasticities, different mode choice elasticities may not be comparable due to the inclusion of different alternative modes or of specific geographical characteristics or properties of the data used in a particular study. Following this line of argument, it is inappropriate both to generalise the value of an estimated elasticity to different circumstances and to calculate the mean of elasticities from different studies. However, when a number of studies with different data and models yield similar elasticity values, the result may be regarded as robust. It is this kind of thinking that informs the rationale behind the current project i.e. that in order to obtain meaningful elasticity results for bus markets in Great Britain, it is necessary to take into account the specificity of not only the national aggregated bus market, but also regional and more micro level factors.

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