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

Author

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  • John Eakins

    (School of Economics, University College Cork and 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.

Suggested Citation

  • John Eakins, 2014. "An Application of the Double Hurdle Model to Petrol and Diesel Household Expenditures in Ireland," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 145, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    • Handle: RePEc:sur:seedps:145
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    More about this item

    Keywords

    Household Transport Demand; Petrol; Diesel; Double Hurdle Model; Income Elasticities.;
    All these keywords.

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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