Chapter 5.4: Economic Modelling

Purpose — This chapter examines links between mobility, risk of social exclusion (SE) and well-being and uses its findings to impute a value to improved (or reduced) mobility. It applies the relevant value to show the benefits of the Melbourne route bus network and to estimate loadings on individual services that are required for service user benefits to break-even with service costs.

Methodology — The research findings are based on econometric modelling of risk of SE and well-being, as a function of a range of likely contributory factors. The modelling draws on household travel survey data and on survey data specifically collected on factors thought likely to affect risk of SE and/or well-being. These factors include social capital, sense of community, household income and trip making, together with a range of psychological and personality variables.

Findings — The modelling shows that a reduced risk of SE is associated with increases in social capital, sense of community, household income and trip making. A lower risk of SE, in turn, is associated with improved reported personal well-being, which is also affected by a range of psychological variables and age. The analysis shows that additional trip making is very highly valued and that this value increases as household income declines. A case study that applies the resulting values shows that Melbourne’s route bus services produce benefits almost four times their costs and that the ‘social inclusion’ benefits calculated in this research comprise the largest single benefit component. This result is particularly important in supporting further investment in improved public transport services.