January 13, 2012

Consumer Response to Stricter Fuel Economy Standards


Dr. David Brownstone, STC Distinguished Speaker, Professor of Economics, UC Irvine


Jinwon Kim, Alicia LLoro, and Phillip Li, Department of Economics, UC Irvine

The impacts of recent changes in Federal light-vehicle fuel economy standards depend crucially on consumers’ response to new vehicles with higher fuel economy and higher prices. Previous studies have primarily relied on stated preference experiments since there was little independent variation in vehicle price, fuel economy, and performance. The recent introduction of hybrid-electric vehicles has provided some independent variation in these key vehicle attributes, so we use data from the 2009 NHTS data to estimate willingness to pay for light vehicle fuel economy. We also estimate the “rebound effect” of purchasing more fuel efficient vehicles. Finally we will comment on the impact of measurement errors and partial observablility on previous studies.

Biographical Sketch

David Brownstone is Professor of  Economics at the University of California, Irvine, and he is also a member of  UCI’s Institute of Transportation Studies and Institute of Mathematical  Behavioral Sciences.  Before coming to UCI in 1984, Brownstone taught  economics at Princeton University and the Stockholm School of Economics in  Sweden.  Professor Brownstone has studied the impacts of tax reform on  housing demand, the impacts of measurement errors in economic surveys, the  demand for alternative-fueled vehicles, and the impacts of carpool lanes and  road pricing.  His current research is using new detailed data to study  the impacts of urban form on household vehicle choice and utilization.  He  is also working with the same data to build a new model to analyze the impacts  of the recently increased Federal light vehicle fuel economy standards.  Professor Brownstone has served as an expert consultant for toll road, high  speed rail, and other major transportation projects in Orange County, California,  Australia, and The Netherlands.  In addition to his applied work,  Brownstone was one of the first econometricians to apply bootstrapping and  multiple imputations to generate valid inferences in complex models. Together with Kenneth Train and David Bunch he was one of the first to apply  mixed logit models in household vehicle demand and transportation mode choice  models.  Brownstone’s recent work on measuring the impact of the built  environment on household vehicle type choice and utilization uses new Bayesian  models and estimation techniques that may be useful in other  applications.  Brownstone has published many articles in top economics and  transportation journals, and he currently serves on the editorial boards of Transportation  Research (Part B: Methodological) and Foundations and Trends in  Econometrics.