Arbeitspapier

Consumer myopia in vehicle purchases: Evidence from a natural experiment

A central question in the analysis of fuel-economy policy is whether consumers are myopic with regards to future fuel costs. We provide the first evidence on consumer valuation of fuel economy from a natural experiment. We examine the short-run equilibrium effects of an exogenous restatement of fuel-economy ratings that affected 1.6 million vehicles. Using the implied changes in willingness-to-pay, we find that consumers act myopically: consumers are indifferent between $1 in discounted fuel costs and 15-38 cents in the vehicle purchase price when discounting at 4%. This myopia persists under a wide range of assumptions.

Sprache
Englisch

Erschienen in
Series: Economics Working Paper Series ; No. 19/321

Klassifikation
Wirtschaft
Consumer Economics: Empirical Analysis
Business Taxes and Subsidies including sales and value-added (VAT)
Production, Pricing, and Market Structure; Size Distribution of Firms
Automobiles; Other Transportation Equipment; Related Parts and Equipment
Mining, Extraction, and Refining: Hydrocarbon Fuels
Thema
fuel economy
vehicles
myopia
undervaluation
regulation

Ereignis
Geistige Schöpfung
(wer)
Gillingham, Kenneth
Houde, Sébastien
Ereignis
Veröffentlichung
(wer)
ETH Zurich, CER-ETH - Center of Economic Research
(wo)
Zurich
(wann)
2019

DOI
doi:10.3929/ethz-b-000342759
Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Gillingham, Kenneth
  • Houde, Sébastien
  • ETH Zurich, CER-ETH - Center of Economic Research

Entstanden

  • 2019

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