Minnesota Pay-As-You-Drive Market Research

The Minnesota Department of Transportation (Mn/DOT) carried out a pay-as-you-drive (PAYD) demonstration intended to test the idea that if people are given frequent price signals regarding the costs of their automobile use, they may reduce their mileage, and alleviate congestion and air quality problems. The project simulated the conversion of fixed costs of vehicles, such as leasing or insurance to variable costs while providing frequent price signals. An important part of the study, and the focus of this paper, was market research into customer acceptance of such potential products. A survey of a sample of Twin Cities Area residents probed interest in PAYD concepts for leasing and insurance. While 25% of respondents indicated some interest in the concept of PAYD, interest dropped to 18% when given explicit choices. Respondents were most attracted to the concept of paying only for the miles they drive. Reasons cited for the lack of interest were the uncertainty of monthly costs, privacy concerns, and a dislike of leases in general. These findings indicate that PAYD products have appeal to a small, but not insignificant portion, of the population, and that PAYD programs will be most effective when they are designed to focus on specific subsamples of the overall population. The overall impact on vehicle miles traveled and traffic during congested conditions were estimated in the remainder of this study, and are documented elsewhere.