Tuesday, October 25, 2005


The underlying premises of economic analysis: individuals have preferences, these preferences are transitively ordered, that we act to maximize the attainment of our preferences - you can do a whole lot with these.

I've heard many people, foreign and American, note how much less common it is to use mass transit in America than in foreign countries with similar levels of economic development/urbanization, such as the upper-tier OECD. Americans love their cars, we're told, they love to drive, and there isn't much we can do about decreasing this.

It's interesting, then, to note that in the face of rising fuel prices, Americans are, apparently, beginning to change their patterns of driving and commuting, and more are using mass transit. As gas price increases, and crosses a certain threshold (one figure cited in the article is $2.65/gallon), people are increasingly likely to use mass transit.

This seems to fit with a lot of thinking about why Europeans, Japanese, and Koreans use mass transit more - or at least are held to anecdotally (I haven't been able to find any comparative statistics on google after 10 minutes of searching). Rather than reflect cultural differences, it may reflect the higher gas prices in other countries. For the week of 10/10/2005, the US average gas price was 3.06 a gallon, compared to 6.19 (Belgium), 5.88 (France), 6.16 (Germany), 6.11 (Italy), 6.52 (Holland), 6.26 (UK).

Gas is not going to go back to being as cheap as it was anytime soon, especially given increased demand for fuel in the developing economies of Southeast Asia, China, and India. As fuel prices stay relatively high, or become higher, will we see increased demand and pressure for mass transit and non-oil based heat and energy production?

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