An econometric model of vehicle use in the household sector

Vehicle-use modelling at the household level has taken on new importance with the pressures on governments to encourage more efficient utilisation of increasingly scarce nonreplenishible liquid fuels. The fundamental energy equation recognizes two direct influences on consumption—the fuel efficiency of the vehicle and the amount of use. Until recently, the interrelationship between vehicle choice and vehicle utilisation at the household level was acknowledged but ignored. The availability of reliable vehicle-use data at the household level now enables a more serious effort at amending the imbalance of research effort where the reliance has been predominantly on vehicle choice modelling and gross (exogenous) assumptions on utilisation as a basis for predicting fuel consumption. This paper proposes an econometric method for identifying the influences on household vehicle use. It differs from previous empirical work in that vehicle kilometers, fuel cost per kilometer and vehicle fuel efficiency are endogenous, with utilisation of each vehicle endogeneously dependent on the utilisation of each and every household vehicle. The data are drawn from wave 1 of a four-wave panel of 1436 households in the Sydney metropolitan area. The empirical findings expose a set of influences on use hitherto not considered. The model specification provides an appropriate module for integration with household-based discrete choice models of vehicle choice.