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Safer or Cheaper? Household Safety Concerns, Vehicle Choices, and the Costs of Fuel Economy Standards

Author

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  • Choi, Young-Young
  • Liu, Yizao
  • Huang, Ling

Abstract

In this paper, we formulate and estimate a mixed logit model of consumer vehicle choices with micro-level data to examine the effect of safety concerns on their vehicle choices, especially on the preference for various vehicle characteristics linked to vehicle safety (MPG, weight, size, etc). Further, using the demand estimates, we simulate consumers’ vehicle choices under alternative fuel economy standards that will result in new product offerings from automakers. We then calculate and compare the welfare change for consumers with different safety concerns. The estimation results suggest that consumers’ safety concerns have significant impacts on their vehicle choices and their preference over safety-related vehicle characteristics.

Suggested Citation

  • Choi, Young-Young & Liu, Yizao & Huang, Ling, 2015. "Safer or Cheaper? Household Safety Concerns, Vehicle Choices, and the Costs of Fuel Economy Standards," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205797, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea15:205797
    DOI: 10.22004/ag.econ.205797
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    References listed on IDEAS

    as
    1. Crandall, Robert W & Graham, John D, 1989. "The Effect of Fuel Economy Standards on Automobile Safety," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 97-118, April.
    2. Kenneth E. Train, 1998. "Recreation Demand Models with Taste Differences over People," Land Economics, University of Wisconsin Press, vol. 74(2), pages 230-239.
    3. Whitefoot, Kate S. & Skerlos, Steven J., 2012. "Design incentives to increase vehicle size created from the U.S. footprint-based fuel economy standards," Energy Policy, Elsevier, vol. 41(C), pages 402-411.
    4. Liu, Yizao, 2014. "Household demand and willingness to pay for hybrid vehicles," Energy Economics, Elsevier, vol. 44(C), pages 191-197.
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    Keywords

    Demand and Price Analysis; Industrial Organization; Resource/Energy Economics and Policy;
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