TY  - JOUR
AU  - Gillingham, Kenneth
AU  - Houde, Sébastien
AU  - van Benthem, Arthur
TI  - Consumer Myopia in Vehicle Purchases: Evidence from a Natural Experiment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 25845
PY  - 2019
Y2  - May 2019
DO  - 10.3386/w25845
UR  - http://www.nber.org/papers/w25845
L1  - http://www.nber.org/papers/w25845.pdf
N1  - Author contact info:
Kenneth Gillingham
School of Forestry and Environmental Studies
Yale University
195 Prospect Street
New Haven, CT 06511
Tel: 203/436-5465
Fax: 203/436-9135
E-Mail: kenneth.gillingham@yale.edu

Sébastien Houde
Department of Management, Technology,
and Economics
Centre for Energy Policy and Economics
ETH Zurich
Zurichbergstrasse 18, 8092 Zurich
E-Mail: shoude@ethz.ch

Arthur A. van Benthem
The Wharton School
University of Pennsylvania
327 Vance Hall
3733 Spruce Street
Philadelphia, PA 19104
Tel: 215/898-3013
Fax: 215/898-7635
E-Mail: arthurv@wharton.upenn.edu
M2  - featured in NBER digest on 2019-07-29
AB  - 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.
ER  -