Knowledge Problem

Gas Prices: Mobility Cost As Percent of Household Budget Has Fallen

Lynne Kiesling

Glen Whitman has a nice analysis of gasoline expenditure as a share of household income. Note that he shows, by income quintile, how the cost of traveling 25,000 miles in a year fell from 1981 to 2000, and that although it rose through 2005 and fell back a bit in 2006, it is still below the 1981 peak, and well below the peak for the bottom quintile of the income distribution.

His argument is a better-researched set of evidence on the same point that I argued in this post and this post from August 2005: in addition to the inflation adjustment to get the proper price comparison with 1981, it’s important to acknowledge that gasoline expenditure as a share of household expenditure, and as a share of household income, has fallen.