Happy or liberal? Making sense of behavior in transport policy design

Abstract

Appropriate microeconomic foundations of mobility are decisive for successful policy design in transportation and, in particular, for the challenge of climate change mitigation. Recent research suggests that behavior in transportation cannot be adequately represented by the standard approach of revealed preferences. Moreover, mobility choices are influenced by factors widely regarded as normatively irrelevant. Here we draw on insights from behavioral economics, psychology and welfare theory to examine how transport users make mobility decisions and when it is desirable to modify them through policy interventions. First, we explore systematically which preferences, heuristics and decision processes are relevant for mobility-specific behavior, such as mode choice. We highlight the influence of infrastructure on the formation of travel preferences. Second, we argue that the behavioral account of decision-making requires policy-makers to take a position on whether transport policies should be justified by appealing to preference satisfaction or to raising subjective well-being. This distinction matters because of the (i) influence of infrastructure on preference formation, (ii) health benefits from non-motorized mobility, (iii) negative impact of commuting on happiness and (iv) status-seeking behavior of individuals. The orthodox approach of only internalizing externalities is insufficient because it does not allow for the evaluation of these effects. Instead, our analysis suggests that transport demand modeling should consider behavioral effects explicitly.