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Car buyers and fuel economy?

  • Turrentine, Tom
  • Kurani, Kenneth S
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    This research is designed to help researchers and policy makers ground their work in the reality of how US consumers are thinking and behaving with respect to automotive fuel economy. Our data are from semi-structured interviews with 57 households across nine lifestyle "sectors." We found no household that analyzed their fuel costs in a systematic way in their automobile or gasoline purchases. Almost none of these households track gasoline costs over time or consider them explicitly in household budgets. These households may know the cost of their last tank of gasoline and the unit price of gasoline on that day, but this accurate information is rapidly forgotten and replaced by typical information. One effect of this lack of knowledge and information is that when consumers buy a vehicle, they do not have the basic building blocks of knowledge assumed by the model of economically rational decision-making, and they make large errors estimating gasoline costs and savings over time. Moreover, we find that consumer value for fuel economy is not only about private cost savings. Fuel economy can be a symbolic value as well, for example among drivers who view resource conservation or thrift as important values to communicate. Consumers also assign non-monetary meaning to fuel prices, for example seeing rising prices as evidence of conspiracy. This research suggests that consumer responses to fuel economy technology and changes in fuel prices are more complex than economic assumptions suggest. The US Department of Energy and the Energy Foundation supported this research. The authors are solely responsible for the content and conclusions presented.

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    File URL: http://www.escholarship.org/uc/item/56x845v4.pdf;origin=repeccitec
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    Paper provided by Institute of Transportation Studies, UC Davis in its series Institute of Transportation Studies, Working Paper Series with number qt56x845v4.

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    Date of creation: 01 Feb 2007
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    Handle: RePEc:cdl:itsdav:qt56x845v4
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    1. Kurani, Kenneth S. & Turrentine, Tom & Sperling, Daniel, 1994. "Demand for Electric Vehicles in Hybrid Households: An Exploratory Analysis," University of California Transportation Center, Working Papers qt1c29r4hr, University of California Transportation Center.
    2. Puller, Steven L. & Greening, Lorna A., 1999. "Household adjustment to gasoline price change: an analysis using 9 years of US survey data," Energy Economics, Elsevier, vol. 21(1), pages 37-52, February.
    3. Train, Kenneth, 1985. "Discount rates in consumers' energy-related decisions: A review of the literature," Energy, Elsevier, vol. 10(12), pages 1243-1253.
    4. Pitts, Robert E & Willenborg, John F & Sherrell, Daniel L, 1981. " Consumer Adaptation to Gasoline Price Increases," Journal of Consumer Research, University of Chicago Press, vol. 8(3), pages 322-30, December.
    5. Calfee, John E., 1985. "Estimating the demand for electric automobiles using fully disaggregated probabilistic choice analysis," Transportation Research Part B: Methodological, Elsevier, vol. 19(4), pages 287-301, August.
    6. Molly Espey & Santosh Nair, 2005. "Automobile Fuel Economy: What Is It Worth?," Contemporary Economic Policy, Western Economic Association International, vol. 23(3), pages 317-323, 07.
    7. Kurani, Kenneth S & Turrentine, Tom & Sperling, Daniel, 1994. "Demand for electric vehicles in hybrid households: an exploratory analysis," Transport Policy, Elsevier, vol. 1(4), pages 244-256, October.
    8. John M. Yun, 2002. "Offsetting Behavior Effects of the Corporate Average Fuel Economy Standards," Economic Inquiry, Western Economic Association International, vol. 40(2), pages 260-270, April.
    9. Greene, David L., 1983. "A note on implicit consumer discounting of automobile fuel economy: Reviewing the available evidence," Transportation Research Part B: Methodological, Elsevier, vol. 17(6), pages 491-499, December.
    10. Roe, Terry L. & Sexauer, Benjamin & Kinsey, Jean D., 1981. "The Cost Of Inaccurate Consumer Information: The Case Of The Epa Mileage Figures," Staff Papers 13511, University of Minnesota, Department of Applied Economics.
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