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Who Values Future Energy Savings? Evidence from American Drivers

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  • Arik Levinson
  • Lutz Sager

Abstract

Regulators attest that energy efficiency standards save consumers money. More efficient light bulbs, appliances, and vehicles would cost more up front but reduce energy expenses by enough to compensate. Using data on American drivers and cars, we show this to be true, but only on average. Many drivers could save money in less fuel-efficient cars. In fact, we find little correlation between mileage and fuel economy. A driver’s income, sex, age, and education are far more closely associated with their vehicle’s fuel economy. Rich drivers are not more sensitive to fuel costs, undermining claims that borrowing constraints explain the mismatch.

Suggested Citation

  • Arik Levinson & Lutz Sager, 2023. "Who Values Future Energy Savings? Evidence from American Drivers," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(3), pages 717-751.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/722577
    DOI: 10.1086/722577
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    2. Kenta Tanaka & Kazuyuki Iwata & Shunsuke Managi, 2021. "MPG Illusion and Vehicle Choice: An Empirical Study of the Japanese Household Survey," Energies, MDPI, vol. 14(21), pages 1-13, November.

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    More about this item

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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