Suggested Citation:
Choo, Sangho (2004) Aggregate Relationships Between Telecommunications and Travel: Structural Equation Modeling of Time Series Data. Institute of Transportation Studies, University of California, Davis, Research Report UCD-ITS-RR-04-49

The purpose of this study is to explore the aggregate relationships (substitution,complementarity, or neutrality) between telecommunications and travel and to compare such relationships across transportation modes. This study first presents a conceptual model, considering causal relationships among travel, telecommunications, land use, economic activity, and socio-demographics. Then, based on the conceptual model, the aggregate relationships between telecommunications (local telephone calls, toll calls, and mobile phone subscribers) and travel (VMT, transit passengers, and airline PMT) are explored in a comprehensive framework, using structural equation modeling of national time series data spanning 1950-2000 in the U.S. At the most detailed level, individual and joint structural equation models for telecommunications and ground travel or airline travel were developed, using selected subsets of the endogenous variables, and then the causal relationships between the two were compared by mode. The model results suggest that most significant causal relationships between telecommunications and travel are complementary. That is, as telecommunications demand increases, travel demand increases, and vice versa. The only exceptions are the two causal relationships between transit passengers and mobile phone subscribers, which are substitutive. Furthermore, there are a number of neutral (zero net) effects of telecommunications on travel or vice versa. Overall, causal effects between telecommunications and travel are different among their modes. However, most of them are complementary regardless of the causal direction. At a less detailed level, composite indices for eight endogenous variable categories were constructed by combining the variables of a given category into a single composite indicator for that category through confirmatory factor analysis. Then, structural equation models for travel and wired (telephone calls) or mobile (mobile phone subscribers) telecommunications were estimated, using the composite indices and sociodemographic variables. The estimated models also support that the aggregate relationship between actual amounts of telecommunications and travel is complementarity, albeit asymmetric in directional weight. That is, as travel demand increases, telecommunications demand increases, and (to a lesser extent) vice versa. Consequently, the empirical results from both levels of structural equation modeling strongly suggest that the aggregate relationship (or system-wide net effect) between actual amounts of travel and telecommunications is complementarity, not substitution.