Analysis of consumer response to fuel price fluctuations applying sample selection model to GPS panel data: Dynamics in individuals’ car use

Abstract

The effects of fuel price increases on people’s car use have been widely discussed during the last few decades in travel behavior research. It is well recognized that fuel price has significant effects on driving distance and driving efficiency. However, most of this research assumed that these effects are invariant across individuals and weather conditions. Moreover, intrinsic variability in people’s preferences has not been given much attention due to the difficulty of collecting the necessary data. In this paper, we collected detailed travel behavior data of 276 respondents in the Netherlands, spanning a time period between one week and three months using GPS logs. These GPS data were fused with weather data, allowing us to estimate both exogenous (such as weather and fuel price) and endogenous effects (inertia and activity plans) on individual’s car use behavior. To further understand the effects of fuel price on the environment, we estimated the effects of fuel price fluctuation on CO2 emissions by car. The results show a significant degree of inertia in car use behavior in response to increased fuel prices. Weather and fuel price showed significant effects on individual’s car using behavior. Moreover, fuel price shows two-week lagged effects on individual’s travel duration by car.