The cross elasticity between gasoline prices and transit use: Evidence from Chicago

• Estimates cross elasticity between gas prices and transit use in Chicago 1999–2010.
• When gas prices were less than $3 a gallon, cross elasticities were small.
• Elasticity increased to 0.12–0.14 for rail-based modes when gas prices exceeded $3.
• Elasticities were in the 0.28–0.38 range when gas prices exceeded $4.
• These latter elasticities are similar to, or larger than, those found in the 1970s.

This paper calculates the cross elasticity between the price of gasoline and transit ridership in Chicago using monthly data for the period between January 1999 and December 2010. Separate estimations are conducted for city heavy rail, city bus, commuter rail and suburban bus services. A 12-month difference model is used to overcome seasonality. The paper finds that the cross elasticities when gas prices were less than $3 a gallon were small, with a magnitude of less than 0.05. When prices exceeded $3 a gallon, the elasticity was larger, in the range of 0.12–0.14, for the rail modes. In the summer of 2008 when prices exceeded $4 a gallon, there was considerable responsiveness with elasticities of 0.28–0.30 for city and suburban bus, and 0.37 for commuter rail. These values are similar to, or even larger than, those found during the oil crises of the 1970s and early 1980s.