More Evidence that Consumers Respond to Gas Prices
Increases observed in mass transit use
27 May 2008 in Regulatory Economics
During the short-lived debate about suspending the federal gas tax to ease prices, economists quoted in the news seemed to agree that consumer demand is highly inelastic -- that is, as price increases a lot, the quantity demanded changes very little.
The news increasingly contains stories suggesting that consumers respond more to changes in the price of gasoline than economists have assumed is the case. Example: rising use of mass transit.
Washington Post staff writers Lena H. Sun and Jonathan Mummolo report that several public transit agencies have experienced significant increases in ridership.
A figure presented in the Post illustrates these changes.
