Expenditure on personal mobility

Indicator Assessment
Prod-ID: IND-174-en
Also known as: TERM 024
expired Created 31 Mar 2010 Published 05 Jul 2010 Last modified 19 Apr 2016, 04:57 PM

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The share of household expenditure on transport has been broadly stable over time (when aggregated across countries and income bands). Data suggest that increased fuel prices have given rise to increased expenditure on operational costs, and decreased (purchases of vehicles in recent years). High income groups and economically developed countries spend more on car purchase and transport than do low income groups and countries.

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Key messages

The share of household expenditure on transport has been broadly stable over time (when aggregated across countries and income bands). Data suggest that increased fuel prices have given rise to increased expenditure on operational costs, and decreased (purchases of vehicles in recent years). High income groups and economically developed countries spend more on car purchase and transport than do low income groups and countries.

How much are households spending on transport? What approaches should countries apply to ensure equality but to enable transport demand management of households with different spending patterns and income? What approaches should countries apply?

Share of household expenditure on transport services across countries (% of total spending, 2007)

Note: Share of household expenditure on transport services across countries suggests that a number of different factors affect the levels of expenditure.

Data source:

Eurostat. Data / Population and social conditions / Living conditions and welfare / Consumption Expenditure of Private Households / Mean Consumption Expenditure of private houwseholds / Mean consumption expenditure by detailed COICOP level. http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,45323734&_dad=portal&_schema=PORTAL&screen=welcomeref&open=/livcon/hbs/hbs_struc&language=en&product=EU_MASTER_living_conditions_welfare&root=EU_MASTER_living_conditions_welfare&scrollto=228

 

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Share of household expenditure on transport services across countries (% of total spending)

Note: The table reports the share of household expenditure on transport services across different european countries as percentage of total spending.

Data source:

Eurostat. Data / Population and social conditions / Living conditions and welfare / Consumption Expenditure of Private Households / Mean Consumption Expenditure of private houwseholds / Mean consumption expenditure by detailed COICOP level. http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,45323734&_dad=portal&_schema=PORTAL&screen=welcomeref&open=/livcon/hbs/hbs_struc&language=en&product=EU_MASTER_living_conditions_welfare&root=EU_MASTER_living_conditions_welfare&scrollto=228

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The share of household expenditure on transport appears to be relatively stable across time, countries, and income groups, although there are some exceptions. Statistics indicate a slight increasing tendency in the 70's and 80's, which was particularly pronounced for Italy and the UK.
Transport related household expenditure was stable also during the last decade. Data capture for 2008 is currently low, and therefore may not be particularly representative. However, a general increase in the percentage of household expenditure can be seen in recent years. This is driven by increased operational costs, presumed to be driven by increases to fuel prices. 2008 indicates a corresponding decrease to vehicle purchases (see Figure 1). The rise in the share of transport related expenditure can be explained by the fact that it takes time for households to adjust to increases in prices, which have been relatively fast. Whilst expenditure may be expected to fall in later years as prices stabilise, the impact of the global recession is likely to have a larger effect.
The share of spending on transport for many years appeared to be linked to the increase of personal income. Interestingly, relative prices of vehicles have come down during the last years (see TERM20), however the household expenditure (as a percentage) remained relatively constant (Figure 1). As wealthier people are more inclined to spend on vehicles as luxuries and status symbols, the greater share of spending could therefore better be attributed to these factors rather than purely transport. Consequently, the share of expenditures on transport is roughly the same across income groups, although some increase with income is discernible. In absolute terms, the expenditures on transport increase with growing incomes, reflecting the increased consumption of transport (e.g. fuel). Variations can be found between social groups, for example retired people spend significantly less on transport, as do the unemployed. Travel budgets are also much lower for households without a car, a situation more common in the lower income groups, and may explain the differences among income groups. With the rise in car ownership in recent times, fewer households have no car, and the average share of expenditures spent on (car) transport would be expected to rise, which may alternatively explain the small rise.
If the share of income allocated to transport is constant for the different groups in society, increasing the prices (internalisation) should be seen as a useful tool for governments to influence transport volumes. When income increases faster than transport prices, which has been the case in recent years, transport becomes more affordable, and with a stable share of the income allocated to transport, transport volumes increase. However, it is also evident that people not only spend a generally stable fraction of their budget on transport, but also a stable share of their time (Bureau of Transportation Statistics, 2001). As a consequence, travel speed also becomes an important determinant of transport demand, along with costs.
Share of household expenditure on transport services across countries (Figure 2) suggests that a number of different factors affect the levels of expenditure. Whilst households in more economically developed countries are expected spend more on transport, it is also appears that other factors, such as  that the size of the country, population density and general distribution of population are relevant, as is the usage of public transport. Figure 2 shows high percentage expenditure in Luxembourg and Sweden, which is expected in strong economies. Expenditure on public transport is relatively low in these countries. However, relatively low overall expenditure is evident in the Netherlands. This is expected to be due to high population densities and extensive use of bicycles creating less demand for private car ownership and an average expenditure on public transport. Lithuania shows a high overall expenditure. This is driven by operational costs i.e. the lower household incomes mean that expenditure on petrol becomes proportionally higher.
With stable transport prices, decoupling cannot be achieved between affordability and use. As incomes generally increase about 2 % per year, transport expenditures will increase with a constant share of income devoted to transport, leading to greater transport volumes. As data for transport demand (vehicle km and passenger km driven) are not yet available for 2008, it is hard to confirm the overall impact of the price of travel (or price of fuel) on transport demand (or mode). Figure 1 shows how expenditure on the operation of personal transport equipment has been rising in recent years, and the overall cost follows this increase (incomplete data, Eurostat 2009). This suggests that using financial policies alone will give rise to a complex response. In relatively wealthy cross-sections, increasing the cost of travel results in an increased expenditure being used to maintain a similar level of usage. In less wealthy cross sections, lower cost alternatives (including lower levels of travel) are prioritised.

What approaches should countries apply to ensure equality but to enable transport demand management of households with different spending patterns and income?

Indicator specification and metadata

Indicator definition

The share of household expenditure on transport includes public transport (transport by train, bus, taxi, ferries and aircraft), operation of private vehicles and purchase of vehicles.
Total expenditure is defined as total private consumption in the National Account (CP00).
Transport (CP07) is defined as a sum of the National Account consumption groups for:

  • Purchase of vehicles (CP071).
    Purchases cover purchases by households of new vehicles and purchases by households of second-hand vehicles from other institutional sectors, which are typically garages or car dealers. Sales of second-hand vehicles between households are not covered. Purchases are net of sales by households of second-hand vehicles to other institutional sectors. Member States may take either
    - a net weight for new cars (gross weight minus the trade-in value of used cars), and a net weight for second-hand cars, or
    - a gross weight for new cars (not taking into account the trade-in of used cars), and a weight for second-hand cars including any business sector trademargin.
    Purchases also cover purchases through financial leasing arrangements.
    Purchases of recreational vehicles such as camper vans, caravans, trailers, aeroplanes and boats are covered by (CP092.1).
  • Operation of personal transport equipment (incl. use of petrol), (CP072).
    Purchases of spare parts, accessories or lubricants made by households with the intention of undertaking the maintenance, repair or intervention themselves should be shown under (CP072.1) or (CP072.2). If households pay an enterprise to carry out the maintenance, repair or fitting, the total value of the service, including the costs of the materials used, should be shown under (CP072.3).
  • Public transport (CP073) is defined in National Account as Purchased transport services.
    Purchases of transport services are generally classified by mode of transport (passenger transport by railway, by road, sea and inland waterway, combined passenger transport and other purchased transport services). When a ticket covers two or more modes of transport, for example, intra-urban bus and underground or inter-urban train and ferry and the expenditure cannot be apportioned between them, then such purchases should be classified as combined passenger transport. The latter excludes holiday packages (can be found as CP096). Costs of meals, snacks, drinks, refreshments or accommodation services have to be included if covered by the fare and not separately priced. If separately priced, these costs have to be classified in Division 11. School transport services are included, but ambulance services are excluded (CP062.3).

The proportion of household expenditure for private transport is defined as the sum of the private transport groups (CP071 + CP072 + CP073) divided by the total private consumption (CP00).
The classification of consumption groups is made according to the COICOP classification: Classification of individual consumption by purpose (Eurostat, 2000 and Eurostat, 2009).

Units

Percentage of household expenditure on transport.
All prices are expressed in current prices.


Policy context and targets

Context description

There is a generally accepted close link between income and expenditure on transport (Bureau of Transportation Statistics, 2000). In general, people tend to spend a relatively stable share of their income on transport. Seeing this link, increasing transport prices is likely to lead to a decrease in transport demand and consequently reduced pressures on the environment. Conversely, decreases in transport prices are likely to lead to increased demand for transport. Transport pricing may thus not only be a tool to reduce the environmental pressure of transport, but also an important tool for transport demand regulation. 

Internalisation of external cost, a Commission objective from the Transport White Paper (European Commission, 2001) aims to ensure users pay for the external cost generated. The Commission recently published a Communication on a strategy for the internalisation of external costs (EC, 2008a). This strategy stresses “the need for a transport pricing system that is more efficient and more accurately reflects the true costs involved”. In order to achieve this, a range of economic instruments are suggested, including taxation, tolls and CO2 emissions trading. The general principle for internalisation of external costs is ‘social marginal cost charging’, whereby transport prices should correspond to the additional short-term cost generated by one extra person using the infrastructure, ensuring fair treatment of both transport users and non-users and would create a direct link between the use if shared resources and payment on the basis of the ‘polluter-pays’ and ‘user’ pays’ principles. This same principle is expected to be used across the various modes of transport, but with varying instruments. Initially, and depending very much on the mode of transport, this will increase the costs of transport for the user, as the costs of air pollution, climate change and accidents will have to be paid for. In the longer term, the effect on transport prices is likely to be less, since pricing policies will reduce the magnitude of external effects through adaptation.

Expenditure on transport offers insight into a driver of transport demand, which may through better transport demand management contribute to a better environment.

Targets

Fair and efficient pricing across transport modes.

Related policy documents

Methodology

Methodology for indicator calculation

The sources for the expenditure group's private and public purchase of transport can be found in the National Accounts system. 

National accounts are a coherent and consistent set of macroeconomic indicators, which provide an overall picture of the economic situation and are widely used for economic analysis and forecasting, policy design and policy making. Eurostat publishes annual and quarterly national accounts, annual and quarterly sector accounts as well as supply, use and input-output tables, which are each presented with associated metadata.

Annual national accounts are compiled in accordance with the European System of Accounts - ESA 1995 (Council Regulation 2223/96). Annex B of the Regulation consists of a comprehensive list of the variables to be transmitted for Community purposes within specified time limits. This transmission programme has been updated by Regulation (EC) N° 1392/2007 of the European Parliament and of the Council.

Household final consumption expenditure by consumption purposes (COICOP) for Transport (total) (CP07), Purchase of vehicles (CP071), Operation of personal transport equipment (CP072), Transport services (CP073) and Total (CP00) were collected for the EEA-32 (where available, see below), and the totals expressed as a proportion of Total (CP00).

Methodology for gap filling

No gap filling was used in this indicator. However, data was only used for each Member State and year when there was data for each of the four COICOP categories. This means that the Member States included varies from year to year. Member State inclusion in each year for Figure 1 is detailed in the table below. There is no gap filling for Figure 2 – only Member States  for whom data for all four CIOCOP categories were available have been included.

For the assessment jan 2011. The number of EEA-32 member states’ data used in each year of Figure 1 are (from 1990 to 2008): 12, 14, 15, 19, 19, 27, 27, 27, 28, 28, 29, 29, 29, 29, 29, 29, 27, 26, 21. Data were not available in any year for Croatia, Switzerland and Turkey.

Methodology references

No methodology references available.

Uncertainties

Methodology uncertainty

N/A

Data sets uncertainty

N/A

Rationale uncertainty

N/A

Data sources

Generic metadata

Topics:

Transport Transport (Primary topic)

Tags:
expenditures | transport indicators | transport
DPSIR: Driving force
Typology: Descriptive indicator (Type A - What is happening to the environment and to humans?)
Indicator codes
  • TERM 024
Dynamic
Temporal coverage:
1991-2008
Geographic coverage:
Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom

Contacts and ownership

EEA Contact Info

Cinzia Pastorello

EEA Management Plan

2009 2.10.2 (note: EEA internal system)

Dates

Comments

European Environment Agency (EEA)
Kongens Nytorv 6
1050 Copenhagen K
Denmark
Phone: +45 3336 7100