The relationship between speed and income is established in a micro-economic model focusing on the trade-off between travel time and the risk of receiving a penalty for exceeding the speed limit. This is used to determine when a rational driver will choose to exceed the speed limit. A driver is able to improve his estimate of the probability of getting caught from observing the speed choices of other rational drivers. The relationship between speed and income is found again in the empirical analysis of a cross-sectional dataset comprising 60.000 observations of car trips. This is utilised to perform a regression of speed on income, distance travelled and a number of controls. The results indicate a clear relationship between speed and income whereby a 100.000 kroner increase in pre-tax income, about 35 percent of the average income in the sample, is associated with a speed increase of 2 km/h at longer distances. (Author/publisher)
Abstract