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Formative Experiences and the Price of Gasoline

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  • Christopher Severen
  • Arthur A. van Benthem

Abstract

Formative experiences shape behavior for decades. We document a striking feature about those who came of driving age during the oil crises of the 1970s⁠—they drive less in the year 2000. The effect is not specific to these cohorts; price variation over time and across states indicates that gasoline price changes between ages 15–18 generally shift later-life travel behavior. Effects are not explained by recessions, income, or costly skill acquisition and are inconsistent with recency bias, mental plasticity, and standard habit-formation models. Instead, they likely reflect formation of preferences for driving or persistent changes in its perceived cost.

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  • Christopher Severen & Arthur A. van Benthem, 2022. "Formative Experiences and the Price of Gasoline," American Economic Journal: Applied Economics, American Economic Association, vol. 14(2), pages 256-284, April.
    • Handle: RePEc:aea:aejapp:v:14:y:2022:i:2:p:256-84
    DOI: 10.1257/app.20200407
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    Cited by:

    1. Christopher R. Knittel & Shinsuke Tanaka, 2019. "Driving Behavior and the Price of Gasoline: Evidence from Fueling-Level Micro Data," NBER Working Papers 26488, National Bureau of Economic Research, Inc.
    2. Johan Gars & Daniel Spiro & Henrik Wachtmeister, 2022. "The effect of European fuel-tax cuts on the oil income of Russia," Nature Energy, Nature, vol. 7(10), pages 989-997, October.
    3. Mattauch, Linus & Hepburn, Cameron & Spuler, Fiona & Stern, Nicholas, 2022. "The economics of climate change with endogenous preferences," Resource and Energy Economics, Elsevier, vol. 69(C).
    4. Johan Gars & Daniel Spiro & Henrik Wachtmeister, 2022. "What is the effect of EU's fuel-tax cuts on Russia's oil income?," Papers 2204.03318, arXiv.org, revised May 2022.
    5. Delbosc, Alexa & McCarthy, Laura, 2021. "Pushed back, pulled forward: Exploring the impact of COVID-19 on young adults’ life plans and future mobility," Transport Policy, Elsevier, vol. 107(C), pages 43-51.
    6. Knittel, Christopher R. & Tanaka, Shinsuke, 2021. "Fuel economy and the price of gasoline: Evidence from fueling-level micro data," Journal of Public Economics, Elsevier, vol. 202(C).
    7. Javier D. Donna, 2021. "Measuring long‐run gasoline price elasticities in urban travel demand," RAND Journal of Economics, RAND Corporation, vol. 52(4), pages 945-994, December.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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