Why are young people driving less? Evidence points to economics, not preferences

Why are young people driving less? Evidence points to economics, not preferences

Trends in driving behavior over the last 20 years have led to speculation about a less car-centric urban future. Young adults are less likely to have access to a vehicle in their home and are less likely to have a driver’s license. At first glance, this might appear to be a win for the city planners and urbanists who have advocated for policies that reduce auto dependence.

However, research indicates that it is changes in the circumstances of young adults that explains most of these trends. Neither better urban policy nor generational change is likely responsible for these changes—at least not yet.

Policies that prioritize pedestrians and transit users—such as congestion charging, reducing or removing minimum parking requirements, and building more pedestrian-friendly infrastructure—have notable benefits. But despite these improvements, it is probably a mistake to interpret the shifting behaviors of young adults as manifesting a preference for better urban policy. More transformational shifts in policy will likely be required for such generational change in automobile ownership to take root.

Automobile access has mildly declined for young adults

Share of people by age with vehicle access in households in 1960, 1980, and 2015-2019 Age 55 and younger

Today, fewer young adults in the U.S. have access to a car in their household than they did in 1980. Figure 1 shows the share of people by age that had access to a vehicle in their household in 1960, 1980, and 2015-19. In the most recent period, vehicle access is as much as 1 percentage point lower than in 1980 for those aged 25 to 38.

This mild decline in young adults’ automobile access shows up in related measures. For example, fewer young adults have driver’s licenses than in the past, and young adults are driving fewer miles than they did in the 1990s. Adults in this age range are broadly referred to as millennials, and much has been made about how differences in their behaviors are disrupting consumption patterns and economic activity.

There have been a number of other substantial changes in car access since 1980. Today, more children grow up in houses with a car than in 1980, and more middle-aged and older adults now have automobile access (Figure 2). There are many underlying causes for these shifts, but increased suburbanization and migration to Sun Belt cities—which tend to be more automobile-oriented—likely contribute. While there have also been substantial changes in household structure over this timeframe, accounting for such changes does not alter the overall conclusions about changing vehicle access presented in Figures 1 and 2.

Share of people by age with vehicle access in household in 1960, 1980, and 2016-2019 Age 50 and older

However, it is important to put these changes in context. The shift in automobile access between 1980 and 2015-19 is quite small when compared with the change between 1960 and 1980. That 20-year period saw a 12.3 percentage point increase in automobile access within the average household, rising from 78.9% in 1960 to 91.2% in 1980. As of 2019, it stood at 93.8%.

Rising incomes, falling automobiles prices, and suburbanization explain much of the shift between 1960 and 1980, and changing labor force participation (especially among women) likely played a substantial role as well. Contrasted with the change between 1960 and 1980, the increase in vehicle access since 1980 is much less significant.

Automobile access trends reflect differences in circumstances

What does the change in automobile access and other driving behaviors among young adults reflect? There are three leading hypotheses.

The first common explanation is that younger people just like different things than they used to—in economic parlance, we say that their “preferences” have changed. Another explanation is that there has been a change in the circumstances that young adults face, such as being more indebted, delaying starting a family, cars becoming more expensive, or having a lower income. These factors may render cars a less practical option. A final possible explanation is that cities have become better at providing widespread access to destinations without requiring cars.

There is almost no economic evidence that supports the first explanation that a change in preferences has manifested in altered driving behaviors—at least so far. Rather, most evidence points to major changes in younger people’s circumstances as the reason why they drive less and are less likely to own cars.

These circumstances include income and the number of workers within the household, which are key for explaining differences in vehicle miles traveled. Households with lower incomes drive less, and households are now less likely to include two working adults, which reduces the amount of commuting required. Also important are the increasing urbanization of young adults and their delayed family formation. A detailed study of millennials and Gen Xers in California showed that what appear to be differences in preferences are really just driven by differences in material and household circumstances.

More generally, young adults’ consumption patterns reflect their greater economic precarity relative to prior generations—they have lower earnings, fewer assets, and less wealth than prior generations did at similar ages. Gas prices and the cost of insurance have also increased substantially since 1990. Excluding the Covid-related price shock of the last three years, automobiles themselves have become relatively cheaper (the green and blue lines of Figure 3)—however, greater economic precarity and the higher costs of other goods (as reflected by the red line in Figure 3) dominate this cheaper price, resulting in less automobile access.

CPI for all items, for used cars and truck, and for new vehicles

Meanwhile, there has been an increase in the share of young college graduates in cities, which may suggest optimistic support for better urban policy. However, this urban revival likely reflects an increase in the demand for—rather than the supply of—urban amenities, as well as delayed household formation and childbearing. Though many of these households seem to want reduced commuting times, declining transit ridership in the later 2010s suggests that they’re not yet turning to buses and trains.

Implications for a less car-centric future

Young adults are more concerned with environmental policies, such as those impacting auto use and urban form, than older generations. But research shows that their preferences when it comes to transportation are not manifestly different once life circumstances are taken into account. Therefore, we cannot simply rely on the preferences of young adults to lead to better transportation outcomes. When faced with urban environments that are inconvenient to navigate without a car, most people (who can afford it) will still use a car.

Indeed, trends in transit ridership could suggest a darker interpretation. Transit ridership per capita—especially bus use—declined during the 2010s. If people face both a lack of transit options and find car ownership infeasible, then they will be less able to access jobs, go shopping, or maintain social networks. Being stranded in a desert of inaccessibility is not a desirable personal or social outcome.

There has been a notable increase in pro-housing organizations, which often support robust urban policies. But this should be taken only as tepid evidence in support of a generational shift in priorities. The clear difference between younger and older generations on environmental policy is much less strong for urban attitudes, such as having a diverse set of businesses near their homes, supporting local transit access, and accepting smaller homes or yards in exchange for these amenities. Even “streeteries”—which became a bright spot for American urbanism as the pandemic greatly increased their adoption—are now being torn up, in part because dining six inches from traffic can be unpleasant.

American policymakers and urbanism advocates should not bet the farm on changing driving preferences. Instead, if stakeholders want to get more people out of cars, more work is needed to educate politicians and the public in order to build coalitional support for more efficient and equitable urban policies.