Why is Gen Y driving less?

After growing consistently for many decades, car use is falling in developed countries (e.g. USA, Australia, Britain). A notable aspect of this decline is the fall-off in driving by young people.

New data from the US Federal Highway Administration (see here and here) shows that although they increased their share of the US population slightly over the period, those aged 21-30 accounted for only 14% of all miles driven in 2009, compared to 21% in 1995. Another study reports that in 2008 only 49% of 17 years olds had driver’s licenses compared to 75% in 1978.

There is now a sharp difference between Gen Y and baby boomers. A typical 58 year old in the US last year drove 11,607 miles, while the average 28 year old drove just 7,011 miles.

Neither the GFC nor the recent escalation of petrol prices fully account for these changes because the decline in driving preceded these events. So what is driving Gen Y to abandon what has traditionally been one of the great rewards of coming-of-age?

The explanation usually advanced is that the internet has enabled electronic communication to substitute for face-to-face contact. As I’ve pointed out before, however, reputable researchers conclude the exact opposite – electronic communication increases the demand for face-to-face contact more than it substitutes for it.

Another common explanation is Gen Y’s fetish for electronic gadgetry. The argument goes that they increasingly prefer public transport because they can now use it more productively. I don’t doubt a digital gadget makes public transport more useful and enjoyable (just like afternoon papers used to) but to argue it’s a major driver of patronage is stretching credibility – it’s hard to use a laptop when you’re hanging from a strap (and you can use a phone or listen to music almost as easily while driving as you can on a train or bus).

My feeling is there’s no single dominant force driving this shift – it’s more likely due to a number of factors working together (and here I’m talking mainly about the US, simply because there’s better data).

First, it’s harder today to be a driver. A number of States in the US have made getting a license more onerous and more expensive. Others have raised the drinking age while simultaneously ramping up enforcement – it’s simply getting too risky to drive.

Second, it’s getting more expensive to drive. Apart from higher petrol prices, the cost of insurance for drivers under 25 is becoming increasingly prohibitive.

Third, many young people have less discretionary income. They stay longer in formal education and when they graduate they usually have to pay off student loans. And they have other new demands on their income like paying for mobile phones, laptops and other mandatory electronic gadgetry. In Australia at least, the cost of housing has risen and might absorb more of the discretionary income of Gen Ys.

Fourth, many Gen Ys live alone, marry later and have fewer dependents. They are just less likely to undertake tasks like ferrying children around or going to the super market once a week to do the family shopping – tasks which can be done much more easily with a car.

Fifth, more Gen Ys are working in the CBD and/or living in the inner city. They usually don’t need, or can’t use, a car to get to work. It’s often too hard or too expensive to park and since many live close to most destinations the standing costs of cars can’t be justified. If a car is needed it’s often easier to car pool with a designated driver.

Sixth, there are more migrants and overseas-born students for whom public transport rather than cars is the “normal” means of travel. Moreover, for some the level of public transport service in a city like Melbourne is better than what they’re used to.

Finally and perhaps most importantly, cars are now a commodity. Sheryl Connelly from Ford Motor Co says, “I don’t think the car symbolizes freedom to Gen Y to the extent it did to baby boomers or, to a lesser extent, Gen Xers”. There’s an increasing proportion of the population for whom cars don’t signify “cool” as much as they used to – they’re are more likely to say environmental vandal. It’s probably also true that public transport no longer says “uncool”.

Combine these largely Gen Y-specific factors with the more generalised problems of traffic congestion and higher petrol prices (and in the US lower incomes from the GFC) and it’s not so surprising that young people are increasingly responding by lowering car ownership and use.

Gen Ys have a variety of adaptive behaviours that differentiate them from many baby boomers, such as greater use of public transport, walking and cycling; living in more accessible locations close to friends and peers; and living with their parents who will drive them places or occasionally lend them a car. And yes, public transport, which in many cities is getting better, is a little more useful and enjoyable since technology and economics combined to enable passengers to make phone calls and listen to music.

While we don’t know whether or not most Gen Ys will buy cars with the same enthusiasm as baby boomers once they’ve gotten older, paid off their debts, made a little money, gotten married and decided to have children, the forces discussed above suggest that this might not be a transitory phenomenon. My feeling is that early habits and expectations to some extent become ingrained and that, provided they have access to it, many Gen Ys will choose to stay with public transport. That will require of course that the standard of public transport doesn’t let them down.

---