While the total cost for a car might be higher, for an individual trip the choice is rationally made only on the incremental cost -- that is, the extra cost of making that trip vs. not making that trip by car. Gas isn't the only cost, but depreciation wouldn't be included, nor would all the service costs, nor insurance (unless perhaps these trips bump you into a higher mileage and rate for insurance, but that's unlikely).
Unless this trip is somewhere close to the tipping point for whether Chris will own a car or not, factoring in the complete cost of the car isn't a proper analysis.
Amortizing costs
Posted bytseaverat
2008-12-27 04:46 PM
> Gas isn't the only cost, but depreciation wouldn't be included,
Depreciation is driven linearly by mileage. It is part of the
$0.45 or so per mile that the IRS permits you to deduct for
business travel, for instance.
> nor would all the service costs,
Maintenance is almost purely mileage-driven (as opposed to
repairs). It likewise factors into the IRS rate. I figure that
the oil-and-filter change costs about $0.01 per mile, for
instance. Other maintenance items happen at essentially fixed
intervals (15k, 30k miles), and are therefore amortizeable.
> nor insurance (unless perhaps
> these trips bump you into a higher mileage and rate for
> insurance, but that's unlikely).
Agreed here.
> Unless this trip is somewhere close to the tipping point for
> whether Chris will own a car or not, factoring in the complete
> cost of the car isn't a proper analysis.
Another point: Amtrak loses *big* when you add another
passenger or two to the trip; *all* of the automotive costs are
essentially fixed (modulo the need to use a bigger or an extra
vehilce. They therefore get amortized per passenger, while the
Amtrak cost increases linearly per passenger.
Unless this trip is somewhere close to the tipping point for whether Chris will own a car or not, factoring in the complete cost of the car isn't a proper analysis.
Depreciation is driven linearly by mileage. It is part of the
$0.45 or so per mile that the IRS permits you to deduct for
business travel, for instance.
> nor would all the service costs,
Maintenance is almost purely mileage-driven (as opposed to
repairs). It likewise factors into the IRS rate. I figure that
the oil-and-filter change costs about $0.01 per mile, for
instance. Other maintenance items happen at essentially fixed
intervals (15k, 30k miles), and are therefore amortizeable.
> nor insurance (unless perhaps
> these trips bump you into a higher mileage and rate for
> insurance, but that's unlikely).
Agreed here.
> Unless this trip is somewhere close to the tipping point for
> whether Chris will own a car or not, factoring in the complete
> cost of the car isn't a proper analysis.
Another point: Amtrak loses *big* when you add another
passenger or two to the trip; *all* of the automotive costs are
essentially fixed (modulo the need to use a bigger or an extra
vehilce. They therefore get amortized per passenger, while the
Amtrak cost increases linearly per passenger.