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Effects of Life Cycle Cost Information Disclosure on the Purchase Decision of Hybrid and Plug-In Vehicles

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  • Dumortier, Jerome
  • Siddiki, Saba
  • Carley, Sanya
  • Cisney, Joshua
  • Krause, Rachel
  • Lane, Bradley
  • Rupp, John
  • Graham, John

Abstract

Energy-saving technologies have a difficult time being widely accepted and consumed in the marketplace when they have a high initial purchase price and deferred financial benefits. Consumers might not realize that, in the long-run, the financial benefits from reduced energy consumption offset much or all of the initial price premium. One strategy to address consumer misconception of this advantage is to supply information on the "total cost of ownership," a metric which accounts for the purchase price, the cost of the fuel, and other costs over the ownership period. In this article, we investigate how providing information on five-year fuel cost savings and total cost of ownership affects the stated preferences of consumers to purchase a gasoline, hybrid, plug-in hybrid, or battery electric vehicle. Through an online survey with an embedded experimental design using two distinct labels, we find that respondent rankings of vehicles are unaffected by information on five-year fuel cost savings only. However, adding information about total cost of ownership increases the probability that small/mid-sized car consumers express a preference to acquire a hybrid, plugin hybrid, or a battery-electric vehicle. No such effect is found for consumers of small sport utility vehicles. Our results are consistent with other findings in similar behavioral economics investigations on this topic and suggest that further evaluation of the effects of providing consumers with information on the total cost of ownership is warranted.

Suggested Citation

  • Dumortier, Jerome & Siddiki, Saba & Carley, Sanya & Cisney, Joshua & Krause, Rachel & Lane, Bradley & Rupp, John & Graham, John, 2015. "Effects of Life Cycle Cost Information Disclosure on the Purchase Decision of Hybrid and Plug-In Vehicles," IU SPEA AgEcon Papers 198643, Indiana University, IU School of Public and Environmental Affairs.
  • Handle: RePEc:ags:iuspea:198643
    DOI: 10.22004/ag.econ.198643
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    File URL: http://ageconsearch.umn.edu/record/198643/files/IU%20SPEA%20AgEcon%20Papers%202015-1.pdf
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    References listed on IDEAS

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    Keywords

    Environmental Economics and Policy; Institutional and Behavioral Economics;

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