People make decisions on how to spend scarce money and time on transport, reflecting in this way not only their mobility needs but also their options and prefer- ences. Economists call these demands, which refers to the amount and type of goods people and businesses will consume under specific conditions. People choose how much to travel, when and how based on what they can afford and what they consider it is their best option. Economics studies these issues and analyses how con- sumers behave.
Many factors affect peoples’ consumption patterns, including monetary costs (reflected in prices) and vari- ous non-monetary costs such as time, discomfort, risk, and status impacts. Examples of non-monetary costs are the time spent travelling to and from the bus stop or sta- tion (and its quality, e.g. exposure to weather and unsafe traffic or personal security conditions), travel time
on the bus (and its quality, e.g. sitting vs. standing in crowded conditions), and other important user-perceived attributes (e.g. if riding the bus is seen as causing a loss
of status or is accepted behaviour among the user’s peers).
Price changes can affect travel decisions in various ways. When transport prices decline, mobility (the amount that people travel) tends to increase, and if prices increase, mobility tends to decline. Transport price changes can affect trip frequency, route, mode, desti- nation, scheduling, vehicle type, parking location and type of service selected. Such decisions are considered marginal: they are between similar alternatives and so may be influenced by small price changes. Although individually such decisions may seem variable, in aggre- gate they tend to follow a predictable pattern: price reductions usually increase consumption, and when prices increase consumption declines. This is called the law of demand.