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An Application of the Double Hurdle Model to Petrol and Diesel Household Expenditures in Ireland

John Eakins ()

No 145, Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) from Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey

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 level 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 participate in the diesel market relative to the petrol market as income increases. This finding has implications for the design of policy toward reducing transport emissions as the Irish economy recovers and average household income increases.

Keywords: Household Transport Demand; Petrol; Diesel; Double Hurdle Model; Income Elasticities. (search for similar items in EconPapers)
JEL-codes: C34 D12 Q41 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2014-03
New Economics Papers: this item is included in nep-ene and nep-tre
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Published in Transport Policy 47, 2016, pp. 84–93. (Revised Version)

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Journal Article: An application of the double hurdle model to petrol and diesel household expenditures in Ireland (2016) Downloads
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