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OF DRIVING WITHOUT A LICENCE - page 12 / 14

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the value of d except that d must be higher than indicated by such studies. Never the less, the elasticities estimated here are rather higher than one would expect.

In their literature review of empirical estimates of elasticities of road traffic, Goodwin et.al (2004) define short-term elasticities as responses made within one year and find that long-term adjustment takes between 3 and 5 years. They also conclude that the ratio between long-term and short-term (1-year) elasticities of vehicle km with respect to petrol prices is about 3.0. A reasonable assumption is that this ratio is broadly the same whether one changes the petrol price or total car usage costs. In comparison, our results suggest that the response to increases in car usage costs for drivers occurs more quickly and is substantially greater than for car use in general.

5. CONCLUDING REMARKS In this paper we have inferred drivers’ perceived extra costs per km of driving without a license. Furthermore, we have estimated the ratios between the elasticities of car driving with respect to car usage costs when the time horizons in question are 12 months and 24 months.

The estimations are done using data for car usage costs per km, yearly driving distance for car drivers and their willingness to pay for not losing their driving license for 12 months and 24 months. The calculations are carried out for: 1) different assumptions regarding the short-term elasticity of car driving with respect to car usage costs and; 2) two different assumptions concerning variable car usage costs per km.

The results show that Norwegian drivers’ perceived cost per km of driving increase from about 1.30 Nkr to about 2.30 Nkr (by 77 %) when they lose their driving licence. The perceived extra costs per km of driving illegally are, thus, about 1.00 Nkr. Since the estimated expected penalty per km and other pecuniary costs of driving without a license are very low, most of these perceived extra costs are moral costs. The ratio between the short-term (1-year) elasticity of car driving with respect to car usage costs and the 2- year elasticity is about 4 implying that less than one forth of the responses to driving licence

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