Abstract The objective of this study is to examine the determinants of household petrol and diesel expenditures using a large micro data set of Irish households. This research is timely given the switch in purchases from petrol cars to diesel cars arising out of changes in how vehicle registration tax and motor tax rates are calculated. The study finds that households living in urban areas, households that spend money on public transport and households that do not possess a car will spend less on both petrol and diesel. In contrast, households in possession of higher number of cars, households with more occupants working and households with higher levels of household spending will spend more on petrol and diesel. The econometric methodology employed takes into account the fact that the dependent variable contains zero expenditures. Such an approach has never previously been applied to analyse Irish household transport use and provides interesting insights. In particular the effect that the explanatory variables have on participation in the market is quite different for petrol and diesel. For example, the model predicts a much larger increase in the probability that households will spend in the diesel market relative to the petrol market as income increases. The results have implications for the design of tax policy in the transport sector as the Irish economy recovers and average household income increases.

    Highlights Petrol and diesel expenditures are strongly influenced by income and location. Petrol is a necessity purchase while diesel is a luxury purchase. The double hurdle model provides new insights into petrol and diesel purchasing behaviour. Income changes affect diesel participation to a greater extent than petrol participation. Tax policy could be redesigned in light of future increased diesel participation.


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    Title :

    An application of the double hurdle model to petrol and diesel household expenditures in Ireland


    Contributors:

    Published in:

    Transport Policy ; 47 ; 84-93


    Publication date :

    2016-01-10


    Size :

    10 pages




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English





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