skip to main content

→ Top Stories:
Fracking
Safe Chemicals
Defending the Clean Air Act

Kaid Benfield’s Blog

Car costs may hinder the ability of households to save

Kaid Benfield

Posted June 27, 2011 in Living Sustainably

Tags:
, , , ,
Share | | |

  one house, many cars (by: annethelibrarian, creative commons license)

This study, based on 2001 data from Canada, isn’t new.  But it is telling, and I suspect the only distinctions between its findings and what we might learn from more current data would be of degree.  Look at the amounts spent in various categories of expenditure, and the difference between those households whose total expenditure exceeds income (spenders) and those whose total expenditure equals or is less than income (savers):

  differences in spending between savers and spenders (by: Statistics Canada) 

While savers had higher incomes, as would be expected, overall the spending habits of the two categories were remarkably similar.  The one major difference was in spending for transportation, where spenders outspent savers by 54 percent, primarily due to car purchases.  (Another difference was that savers paid more income tax.)

This confirms that the costs of car ownership significantly affect household spending and suggests that those costs may hinder the ability of lower-income households to save.  The findings in the published report do not compare categories of spending as portions of household income, but other research has found that lower-income households spend a much higher portion of income on transportation than the average, at least in the US. 

The study was conducted by Raj. K. Chawla and Ted Wannell of Statistics Canada, a government bureau.  It also compared differences in spending habits between 1982 and 2001.

Move your cursor over the images for credit information.

Kaid Benfield writes (almost) daily about community, development, and the environment.  For more posts, see his blog's home page.

 
Share | | |

Comments

MarkJun 27 2011 12:12 PM

Right on. Car ownership is like a regressive tax, with transportation expenses being mostly equal between various income groups which own cars. Buying low cost used vehicles (less than $5000) often translates into more frequent repairs, offsetting the initial savings. The only way to "beat the system" is to give up on the idea of car ownership - however, this is impractical for many people living in the suburbs.

T. CaineJun 27 2011 01:50 PM

It would seem to me that this also points to how much more beneficial transit oriented development can be for households with less expendable income. Given that majority of American households have over one car, the opportunity to cut that in half would make a big difference for spenders on that chart--maybe even turn them into savers!

Don BabeJun 27 2011 04:15 PM

Nobody is compelled to buy a car, they are motivated to do it and the graph shows that often it is irrational expenditure. Why would so much more irrational spending go on in the transportation budget than others? I think because it is showy, people measure others success by the cars they drive, not the food they eat or the schools their kids go to. You will find it hard to provide rational solutions to irrational decision making.

R. W. RynersonJun 29 2011 12:27 PM

When I was Marketing Officer for Edmonton Transit, we ran an effective ad campaign that laid these household budget facts on the line -- in the midst of the terrible economic downturn that Alberta was going through. Car dealers complained to City Council that it was unfair and hurting car sales. Our ad budget was slashed in response. Note that they didn't say it wasn't true, just that we shouldn't tell people how much they could save by getting rid of a second car. This study will be safely forgotten.

Comments are closed for this post.

About

Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

Send Me Updates About: Kaid Benfield

As new content on your chosen topic gets posted, you'll receive an automated email via FeedBurner. You can unsubscribe at any time.

Feeds: Stay Plugged In

Feeds: Kaid Benfield’s blog