The True Cost of Driving and Travel Behavior

Steven Polzin's picture














[iv] CUTR analysis of NHTS data.







Steven Polzin is the director of mobility policy research at the Center for Urban Transportation Research at the University of South Florida.



Michael Lewyn's picture

Transportation is expensive for low-income drivers

If I understand Prof. Polzin correctly, he seems to be suggesting that driving is not a major inconvenience for low-income drivers, because used and older cars are not as expensive as new cars.

But according to the Bureau of Transportation Statistics, the median "working poor" driver spends 21 percent of their income on transportation.

That tells me that even with used or older cars, low-income drivers do suffer quite a bit financially from driving.

Steven Polzin's picture

Transportation is expensive for low-income drivers

I did not suggest that "driving is not a major inconvenience for low-income drivers" I simply suggested that forgoing driving will not save them the amount of money many have reported. Driving is a major expense for low income persons. It is also a major factor in their ability to thrive economically in many environments.

Michael Lewyn's picture

Point taken

In that case, we agree more than I thought at first glance.

Sanger-Galton urban planning

Add to what I say above, the point that any household with children, and both parents working, is absolutely unable to afford to locate efficiently to TWO jobs, and schools, and shopping, and other amenities required by them; and walk, cycle and use public transport for all of their requirements.

The urban elites who promote "car-free living" are little more than social engineers engaging in a little de facto eugenics. How dare these proles irresponsibly introduce more CO2 emitting climate criminals onto the planet? We won't introduce a "one child" policy or compulsory sterilisations, we will just use urban planning to make it too expensive for anyone but multimillionaires to breed. Margaret Sanger and Francis Galton must be smiling down upon these people.

Sprawl = Parents' Paradise

I have seen people who live in Wodehouse's parents' paradise of suburban sprawl. They need two incomes to get by; they leave the house at 7AM to start their long commutes; they phone the spouse when they get to work to decide who will pick up the children at day care at 7PM and who will pick up dinner at McDonalds.

As a bonus, they get to spend hours per day fighting traffic on the freeway, and they emit enough CO2 to leave a less livable world for their children.

Charles Siegel

"Options" and out-of-touch urban elites

You never actually engage with my point.

What were these people's OPTIONS?

In free market, low land cost cities, it is FAR CHEAPER to "move closer to any one job".

In your utopian, planned cities where crack shacks cost $1,000,000 (refer "Crack Shack or Mansion") it is prohibitively expensive to live in the LEAST desirable/efficient location (as per your example) and THE COST OF THE VARIOUS OPTIONS ("housing plus transport") GOES UP FROM THERE.

Your assumptions are simply absurd: you make these people out to be stupid or negligent or "lovers of automobiles", when they are mostly victims of the circumstances that utopian planning has imposed on them. Do you actually ever talk to such people and discuss real life options with them? Oh, sure, they should save on transport costs by living in a condo with 20 square foot per household member, that still costs several times more than their sand suburb home, and that has nowhere safe for their kids outside the home, and "chained" trips to school, shopping and work that will involve them in the region's worst congestion. Oh, they should use transit for all these trips. Yeah, right. Your type are simply the covert inheritors of the Sanger/Galton tradition. Why don't you just come right out with it and advocate "one child" policies and compulsory sterilisation?

One of the most Orwellian arguments of all time, and one hears this all the time these days, is that the planners are "increasing housing choice".

In the process, they have caused a fringe McMansion to rise in price from $150,000 to $450,000 (NONE of that being in extra building quality or size) and condos near centrally located office jobs, from $150,000 to $1,000,000.

How "Smart" is THAT? This is "increasing housing choice". Yeah, on the planners planet Orwell.

Meanwhile, in any affordable, "sprawling" city that smart growthers love to hate, anyone changing their job to anywhere in that city, will have a high chance of being able to afford to move closer to their new job. The lower the urban land rent curve is from fringe to CBD, and the more dispersed employment is, the LESS "the cost of land" prevents efficiency-gaining location decisions.

Consider the high costs of suburban sprawl

If you're concerned about high costs, Wodehouse, consider that the half of America that lives an automotive lifestyle and that tends to live in the suburbs consumes 90% of transit dollars, while the half that doesn't drive and that tends to live in an urban center only gets 10%.

Does that sound even remotely fair? What if those spending percentages were reversed? I don't think you'd like that at all.

America, meanwhile, spends some $300 billion a year on road construction and maintenance, not to mention $100 billion a year on oil wars.

Do you think there are things that we can spend our money on that are just a tad bit more important than your precious suburbs?

You know? Like education for our kids? Health care for our sick and elderly? Mass transit that helps the working poor become productive? Emergency services that keep us all safe?

As for housing costs in the urban center, building more housing is the only way to stabilize prices. Not building housing for all these decades is what caused the shortage and subsequent high prices in the first place.

You call THOSE, "facts"?



But the costs of those externalities even when compiled by the most anti-automobile of analysts, are never much more than 15% of the costs that ARE explicitly covered by drivers. But what proportion of the total costs of transit, do riders cover? Even the benighted Weyrich and Lind admitted in their "myth busting" papers that many transit systems cover only 10% of their cost in fare revenue i.e. the "subsidy" is 90%, versus 15% max. in the case of car drivers. (Maybe in the most efficient rare cases of transit systems, as much as 50% of the cost is covered)






"Vehicle Ownership and Income Growth, Worldwide: 1960-2030" by Joyce Dargay, Dermot Gately and Martin Sommer (2007) points out that Germany and the UK are outliers among the European nations due to punitive impositions on drivers and car owners (far in excess of anything necessary to correct for externalities and the cost of roads). There is a very interesting "S-shaped" relationship between incomes and automobile ownership that holds very constant for almost all nations in history. France and Italy, for example, appear to be on track to achieve vehicle ownership "saturation" at a level close to the USA. The same goes for Canada, Australia, and New Zealand.

Developing countries are tracking along the same "S" curve; they are just still closer to the bottom of it.

The fact that such a high proportion of people in Germany still actually drive even with punitive costs something like treble the necessary level to correct for unpriced externalities, is evidence of very large "consumer surplus" for "automobility"; this is prima facie evidence for a very high economic value of automobility.

No such "consumer surplus" or prima facie evidence for a very high economic value for transit, exists.

The former USSR did not fail "in spite of the advantage" of having everyone forced to live in apartments and catch trains. This was an inherent part of "the reasons why" their economy was so inefficient.

Good luck trying to make "housing" affordable by building taller and taller apartment buildings. All the evidence actually points to "building OUT" as being far superior to "building UP", for "costs of space" (for households and businesses) AND for economic productivity. Karl Marx and Frank Lloyd Wright both pointed out the correlation between the "rentier" class capturing the major share of increases in the fruits of labour, and the restriction of ownership of land to small "urban footprints". Marx's "solution" was of course the nationalisation of land. Good luck with that, too.


We live in the Reality-Based Community.


I'd ask for reality-based evidence, but I know that won't be forthcoming. So I simply call BS.

Wodehouse has scuttled back, so our BS meters will be ringing.



"Forgoing Driving" Will NOT Save Them Money - EXACTLY

Too busy to take much part here lately, but what Steve is saying is very important.

"......forgoing driving will not save them the amount of money many have reported......"

In fact, the urban land price curve always results in the price of "location" rising faster than the price of "travel". The only exception is for people who trade off a LOT of living space. The Contrarian Planner above may have been exaggerating about the $785,000 condos, but his point was totally valid. And in the bubble markets, his $785,000 is probably NOT even much of an exaggeration.

Steve, a focus on "actual" costs of HOUSING is just as wrong as a focus on "actual" costs of car travel. (As you say, cheaper-than average travel is easily obtainable). But there is also a major difference between the "actual" costs of housing, and WHAT THE COSTS WOULD BE FOR SOMEONE BUYING A GIVEN PROPERTY TODAY.

Of course the "drive to qualify" suburbs had the most foreclosures, because the residents were disproportionally people who had bought their first homes AFTER the prices started inflating. AFTER the prices started inflating, there was NO WAY any of these people could afford to buy in an EFFICIENT location. The "drive to qualify" location was barely affordable, in fact "unaffordable" and risky for most.

But for people like Todd Litman and Charles Seigel to say that the buyers of these suburban homes "should have bought a home somewhere where they could have saved on transport costs" is what I call Marie Antoinette Planning Syndrome. It was unwise to buy a $450,000 sand suburb house and have to spend $10,000 a year driving, but it was NOT the "answer" as Litman et al allege, to buy a $1,000,000 house or a $785,000 condo in an efficient location - and these literally ARE the prices in a bubble situation. (See "Crack Shack or Mansion" online).

In a non bubble market like in any of the 200 odd cities in the USA that the Demographia Reports show to have had low and stable housing prices, the "choices" are more like, between a $150,000 fringe McMansion and a $150,000 house in a mature, efficiently located suburb; and the condos might also be $150,000 or even less. Utopian planners driving up the urban land price curve across its entire length and talking about "increasing choice" are talking out of the wrong orifice.

Michael Lewyn might be "getting it" about the above reality too, going by his comments. There is nothing like being young and not yet a property owner, to give one a grasp of reality.

But, but, but

Todd Litman has told us ad nauseum how it is so much *cheaper* to buy a $785,000 condo in the city and give up your car. Could it really be possible that individuals actually understand their own trade-offs and do what is in their best interest? Perhaps some additional links to Todd's many "studies" would help :-)

In all seriousness, it would be far more fruitful to make driving more expensive to account for its full costs rather than try and convince everyone they are crazy and stupid to live cheaply in a suburban hell.

Michael Lewyn's picture

Now that's what I call attacking a straw man

My condo doesn't cost $785,000! (I think I'll let Mr. Litman speak for himself on that one...)

Instinctive bias towards transportation over housing costs

I'm not so sure consumers are generally rational. There seems to be systematic and measurable forms of irrationality in the marketplace, and many of these are at play in the difference between housing and transportation costs. We tend to weigh upfront cost more heavily than an equivalent cost that is spread out over a long period of time. When a household is looking to purchase a home, the housing costs must be confronted from the start while transportation costs are incurred only after the decision is made and not all at once. Even so, many people will choose to irrationally accept a mortgage that is higher and riskier than they can handle, which is why banks don't let them do this (at least now they don't). There is a system of checks and balances that helpfully constrains households in this way, but there is nobody even advising home-purchasers of the transportation costs they are assuming with the transaction.

Secondly, we tend to measure costs relative to what we see others paying around us. If I'm in a social circle in which everyone else spends a similar portion of their income on transportation, it is naturally going to fade into the background like breathing air. Unless I am confronted with viable alternatives in a clear way, I'm not going to give much consideration to this cost.

Thirdly, we tend to overvalue sunk costs. Most households looking to purchase a home already own at least one automobile, so the fixed price component, which is the most important, may not be factored into the transportation costs associated with a particular location. In reality, anyone can sell a vehicle at market rate at any time, so the fixed costs should be figured in. We just tend to avoid going back on decisions we have already made, even if it is more rational to do so.

Fourthly, we tend to weigh costs that are known more highly than the same cost that is unknown. A mortgage usually yields a fixed monthly rate that is given upfront usually with taxes and insurance neatly bundled into an escrow. On the other hand, it's hard to tell what transportation costs will be until you live in the home for a while, and they may change with new needs. And, of course, gas prices are volatile and basically unknowable. In human decision-making, fixed costs like mortgages are weighed more heavily than an equivalent, more diffuse, cost measured through probabilities (especially when its hard to tell what the probabilities are).

Based on these observations alone, I think we would expect to see households weighing housing costs more heavily than the transportation costs associated with the choice and making decisions in the marketplace that reflect this bias. We might see them moving further from the metropolitan core based on these human instincts in cost valuation. This is before even considering public policy implications.

Your point is well taken that the nationwide averages for transportation costs in the CNT index really should be more closely aligned with the CES averages. Hopefully, the model can be adjusted to get to a closer match, perhaps by considering used cars as you've mentioned. That being said, the power of the index lies not so much in the absolute values attributed to transportation but in the locational variations in transportation costs. I think these variations would still remain, and we even get a hint of this in the CES itself. Households in "Center City" pay less in transportation, both in absolute terms and as a percentage of income, than "Other Urban" or "Rural." It's not as stark as the HTA index, but there is some reality to it. This is the counterpoint to the traditional drive-til-you-qualify narrative, and I'm glad that CNT is starting to tell this story.

Bias Toward Initial Over Lifecycle Costs

Agreed, and it doesn't just apply to housing and transportation. Consumers generally give more weight to initial costs than to total lifecycle costs. This is why energy efficiency standards for appliances save consumers money: without these standards, consumers tend to buy appliances with lower initial costs and to ignore their higher long-term energy costs.

Charles Siegel

Why Are Vehicle Travel Costs Going Down?

"Figure 1 shows the spending trend on vehicle travel by income quintile from Consumer Expenditure Survey data. Costs aren’t particularly high and are not growing – actually shrinking if adjusted for inflation - in spite of generally rising fuel and vehicle costs."

The figure shows that costs have declined for low and middle income groups since 2007 or 2008. There are many causes of this decline, but two obvious ones are:

-- The housing bust his the most remote suburbs the hardest. In the worst sprawl areas, where people drive the most, many houses have been foreclosed and remain vacant. This seems to undermine the claim that sprawl does not impose high transportation costs.

-- Unemployment has gone up. People drive much less when they stop commuting to work - but they will have to drive more when they get jobs again.

Charles Siegel

Steven Polzin's picture

housing bust and sprawl




I would encourage folks to explore more complex sets of phenomenon that have resulted in variable home depreciation rates across geography. I offer the comments above as a potential hypothesis worth exploring. Similarly, one would need to disentangle the impact of investment purchasing of homes (reported to be well over 20% during the peak of the bubble in many locations) from purchases associated with homeowner/resident decisions. Things are most often more complex than the superficial assumption that geography relative to a downtown is a dominant determinant of travel costs and economic condition of a given area.

If anyone has done any research on this I would like to see it.

Re: Housing Bust and Sprawl

You misunderstand my point, which I may not have made clearly enough.

My point was that foreclosures in sprawl-suburbia contributed to the decline in driving, not that high transportation costs in sprawl-suburbia caused foreclosures.

At the top of my comment (above) I quote the statement that I was responding to.

Charles Siegel

understated costs

while you admit that your analysis may understate some travel costs, i think perhaps you underestimate the indirect costs associated with auto travel. You mention infrastructure investment but do not mention the cost of "free" surface parking for each vehicle in multiple locations throughout the day. Far more hidden than the payments spread over time are the higher prices paid for everything else by everyone (even transit users)in order to provide easy access and free parking.

Todd Litman's picture

Vehicle Costs and Savigns

Steven, I agree with your basic point, that often-used vehicle cost estimates do not necessarily reflect the actual costs facing specific categories of motorists, and therefore do not indicate the actual savings from reductions in vehicle ownership and use. In particular, often-cited estimates published by automobile associations reflect newish cars (i.e., the first six years of a vehicle's lifespan) with full insurance coverage, which tends to exaggerate depreciation and insurance costs and underestimates repair costs. Similarly, average annual vehicle travel and expenditure data do not reflect those factors for lower-income households and second cars. These issues are discussed in detail in the "Vehicle Costs" chapter of my report "Transportation Cost and Benefit Analysis" ( ).

However, the higher vehicle ownership and travel required in automobile-dependent, sprawled communities certainly does impose many direct and indirect costs, or put more positively, living in a more accessible, multi-modal community (called smart growth, transit-oriented development or new urbanism) can provide a variety of direct user savings and benefits, including vehicle cost savings, parking cost savings, reduced accident risk, and improved health. The additional costs of automobile dependency are particularly burdensome to lower-income households, which spend a greater portion of their income on transport, and often drive older, less efficient and reliable vehicles, and so are more likely to experience financial stresses when fuel prices spike, or their vehicle fails or crashes.

When we owned a car, which we purchased new, maintained carefully and drove low annual miles, we still spent about $1,000 annually on major repairs (electrical system failure, new tires required, muffler failure, a minor crash, etc.). Similarly, a fuel price spike can increase the cost of driving by hundreds or thousands of dollars a year, as indicated in the ABOGO Model ( ). For many lower-income households these present critical financial problems.

From a household wealth generation perspective it is far better to choose higher-housing-lower-vehicle-costs than lower-housing-higher-vehicle-costs when purchasing a home, since vehicles tend to depreciate while housing tends to appreciate over the long run. As a result, after a decade a household that pays a $25,000 annual mortgage and spend $5,000 on vehicle expenses gains about $100,000 in equity compared with a household that pays a $15,000 annual mortgage and $15,000 on vehicle expenses.

In conclusion, although the details may vary depending on specific circumstances, the basic principle that automobile dependency significantly increases residents' transport costs, and improving transport options can provide significant user savings and benefits is valid, and these benefits are likely to increase in the future due to aging population and rising future fuel prices.

For information see:

Yingling Fan and Arthur Huang (2011), How Affordable is Transportation? An Accessibility-Based Evaluation, CTS Report 11-12, Transitway Impacts Research Program, Center for Transportation Studies (; at

Housing + Transportation Affordability Index (


Todd Litman (2009), "Memo From Future Self: Hope For The Best But Prepare For the Worst," Planetizen (


Asha Weinstein Agrawal, et al. (2011), Getting Around When You’re Just Getting By: The Travel Behavior and Transportation Expenditures of Low-Income Adults, Report 10-02, Mineta Transportation Institute (; at

Todd Alexander Litman
Victoria Transport Policy Institute
"Efficiency - Equity - Clarity"

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