Wednesday, July 15, 2015

The roads not traveled

Jonathan Meer, Jeremy West, Mark Hoekstra and Steve Puller say that, yes, government can take the fun out of things. Specifically, Corporate Average Fuel Economy (CAFE) standards induced people to buy cars they didn't enjoy as much, so they drive them less;
What, then, is the net effect on driving? On one hand, the lower price per mile increases demand for driving, but on the other hand, the vehicles are smaller, less luxurious, have lower performance, and are potentially more dangerous in the event of an accident. These changes in vehicle characteristics can affect the demand for driving through several channels. First, more comfortable and higher-performing vehicles are simply easier to spend more time in. Second, passengers in heavier vehicles experience lower fatality rates in the event of an accident (Anderson and Auffhammer 2014).
  • We find that households did not respond to owning more fuel-efficient, downsized vehicles by driving more.
Essentially, the scholars found no rebound effect--first posited by the economist William Stanley Jevons in the 19th century. The lowered cost of driving was overwhelmed by the displeasure effect.

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