Chapter 1 Introduction
Background
Given declining resources, pressing problems, and environmental constraints, many
government agencies, such as state Departments of Transportation (DOTs), metropolitan
planning organizations (MPOs), and local governments are increasingly motivated to
manage demand for vehicle trips to reduce emissions of greenhouse gases (GHGs), improve
air quality, mitigate congestion, and improve overall performance of their roadway systems
(which is secondary for this study).
Providing financial incentives to commuters to use alternative modes is a common element
of managing transportation demand. This is preferred over other negative enforcements,
such as parking fees, which are politically difficult to implement. In principle, incentives can
make alternative modes much more attractive to commuters by lowering the out-of-pocket
cost of travel. However, the form (cash vs. reward card, payment vs. reimbursement),
amount, and structure (one-time payment vs. recurring payments) can vary and have
different impacts both on the cost of an incentive program to change travel behavior and on
the effectiveness of the incentive program in bringing about these changes. Although
incentives have become common during the past two decades as elements of transportation
demand management (TDM) programs, limited effort has been made to understand how
different ways of providing financial incentives affect commuter mode choice. A better
understanding of how components of incentives affect their impact is critical to enhancing
the performance of financial incentives as a TDM strategy.
At present, employers who offer financial incentives to their employees to promote changes
in travel behavior do so because these incentives, in general, have been shown to be
effective and/or popular with employees. However, different ways of offering incentives
have different costs to the employers and different degrees of effectiveness. Employers who
want to work with public agencies to reduce emissions or mitigate traffic congestion would
benefit from knowing how to offer the most effective incentives for the lowest cost. As an
example, while incentives are effective, they suffer from a “free-rider” problem of making
payments to people who had already decided to change their behavior and who would have
made the change whether or not they received the incentive. An incentive program that
makes recurring payments for desired behavior is likely to have higher costs per free rider
than one that offers a one-time payment for a short period of performing the desired
behavior.
Previous studies have demonstrated how financial incentives influence the use of alternative
modes of transportation, but these studies also found that the success of TDM programs is
influenced by many other factors, such as the use of human resources-related incentives
and location factors. Due to the level of complexity in mode shift decisions by commuters,
well-designed data collection and controlled field experiments are necessary to enhance our
understanding regarding the effectiveness of various financial incentives in TDM programs