How Much Do Consumers Value Fuel Economy and Performance? Evidence from Technology Adoption
This paper evaluates the welfare consequences of automakers forgoing performance increases to raise fuel economy.
During historical periods in which US fuel economy standards were unchanging, automakers increased performance but not fuel economy, contrasting with recent periods of tightening standards and rising fuel economy. This paper evaluates the welfare consequences of automakers forgoing performance increases to raise fuel economy as standards have tightened since 2012. Using a unique data set and a novel approach to account for fuel economy and performance endogeneity, we find undervaluation of fuel cost savings and high valuation of performance. Welfare costs of forgone performance approximately equal expected fuel savings benefits, suggesting approximately zero net private consumer benefit from tightened standards.
Josh Linn is a senior fellow at RFF. His research centers on the effects of environmental policies and economic incentives for new technologies in the transportation, electricity, and industrial sectors.
Yichen Christy Zhou
Common Resources — Dec 7, 2023
Electrifying Transportation: RFF’s Policy Leadership Series
Cathy Zoi discusses ongoing and future efforts to electrify the transportation sector in the United States, including the expansion of vehicle charging infrastructure and automaker investment in electric vehicles, in this new episode of the Policy Leaders
Report — Dec 7, 2023
Policy Challenges for Accessing Critical Minerals to Electrify Vehicle Transport
This report explores challenges to accessing the supply of critical minerals necessary for widespread vehicle electrification in the United States.
In Focus — Nov 21, 2023
In Focus: Sustainable Aviation
This video shares insights about technologies and alternative fuels that can help reduce emissions from aviation, with RFF Fellow Nafisa Lohawala.