Behavior modification. It’s a tricky thing.

If you’re sufficiently geeky, the monthly free seminar/webinar series sponsored by the California Air Resources Board covers some fascinating environmental ground. One recent seminar provided an economist’s view of American automobile fuel economy standards, with particular insight into the effects of these standards on driving behavior. I’m drawing a lot from that one here, and give due credit to Soren Anderson, a visiting researcher at UC Berkeley, whose great slides (.pdf) provided me fodder here.

Simplified refresher: for the past 30 years, the US has had automobile fuel economy standards in place. These standards have mandated, at a manufacturer/importer level, an “overall fleet sales-weighted average” fuel economy level. So each automaker has had to ensure that, when averaged together, all the autos it sells each year achieve the required fuel economy level. The required level has been stable at 27.5 mpg for many years.

One way automakers could reach the target has been to design, market and sell small, efficient cars to bring their fleet average down. (I’m aware of, but ignoring here, the practice of making cars just big enough and just truck-y enough to be exempted from the standards altogether.) This incentive to create small and efficient cars has meant a diverse selection of small and efficient cars for people to buy. Since these cars cost less to operate than their inefficient counterparts, the economist would say that car buyers should prefer to purchase them, depending of course on the value of other car-choice attributes.

So far, so good. Automakers have incentives to create small cars, we have incentives to buy them. This means that without giving up anything we like and want, we have made our driving more efficient.

But the standards have recently been changed. Among other changes, the standards now coming into force differ with car size. On the positive side, this means that automakers have incentives to make all cars efficient (for their size). But on the other side, it means they no longer have incentives, or have less powerful ones, to design and sell small cars.

In other words, the new standards force us, the consumers, to demand small cars of our automakers if we want them to keep making small cars. Yikes! I am not sure I have that faith in our car buyers. Do you?

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erin

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  1. darooda - May 19, 2011

    Just because standards forced automakers to produce small efficient vehicles as a percentage of their fleet, didn’t mean that buyers had to purchase them. The car buying public chose to purchase the cars on their own after weighing their options. I suspect the market for vehicles that perform as efficiently as todays small cars will maintain although the forms they take will surely change.

  2. AP - May 19, 2011

    I am in the market soon to buy a small or mini car. I have more options today than I have in the last 10 years in the US. I see so much excitement and competition over MPG and new tech, I don’t think this is just a fad.

  3. Rich E. - May 19, 2011

    I’m less worried about the availability of small cars than I am about the availability of efficient cars. Even more important is alternatives to driving.
    Frankly, I’d prefer for the ‘market’ to determine what’s best, as long as the externalities get priced in, but since we don’t have a price on carbon (for example), having fuel efficiency standards is a good, politically palatable step in the right direction.
    That said, you are right that people tend to buy cars (and houses) larger than they really need. However, with gasoline around $4/gallon, people are paying a lot more attention to whether or not they really need to drive and if so, what they should drive.

  4. Roger - May 19, 2011

    After gas hit $4 a gallon in 2008, there was a lot of press coverage of people simply dumping their Lincolns, Yukons, Suburbans, etc etc, and defaulting on their loans.
    As soon as gas went back down in price, however, buyers immediately allowed themselves to be enticed by ever-larger autos once again, and I suspect we’re now back to pre-2008 levels again.
    So no, I don’t trust Americans to think intelligently about these things. Americans, again and again, prove that the pocketbook is the only way to appeal to their reason, and so high gas prices is the *only* way to change their auto-purchasing behavior.
    We need to get gas up to at least $6 a gallon for things to change significantly.

  5. Anonymous - May 19, 2011

    From a climate standpoint I think the CAFE standard stuck at 27.5 has been a failure. There was no incentive to exceed that average, and what we got was bloat-ware on wheels from the domestic US automakers.
    My 58 mpg Honda Insight from 2000 is still more efficient than any other auto that I know of, from a carbon standpoint, for someone like me who lives in coal-fired Ohio. But I’ve leapfrogged ahead and switched to bike commuting since 2006, so will be selling the car soon.
    I’d like to see efficiencies across the board. UPS is making their trucks 40% more efficient using composite body panels. I suspect other similar efficiencies are possible with vehicles of all sizes, if we demand them.
    Until more externalities are priced into the market, economists won’t have the final say on these matters. How about Pay-as-You-Drive insurance becoming the new standard across the board? That’s what I’d like to see.

  6. Tom G - May 19, 2011

    Larger vehicles are attaining good fuel mileage. 1/2 ton standard size pickups can get 20-23 mpg. My Lincoln Town Car, 4.6 L, got 23 – 29 mpg, averaging 26.5. Compared to smaller cars, it was competitive and was my insurance policy on the road. Weighing 4000 lbs, it ensured that I would do well in a collision with other cars, pickups, and most SUV’s. I am not inspired to buy a 2600 lb. car to get a few more mpg.
    In 1969, I drove a Fiat 600 which got 40+ mpg. Loved it. The technology is neither new nor original. Mpg’s are more important now, but not as important as changes in our commuter lifestyle dependent on the automobile as prime transportation vehicle for our population. The trouble is that our jobs are no longer focused in cities or manufacturing centers reachable by mass transit. We are bound to fail until this is changed. or we revert to our past agricultural or hunter gatherer heritage.

  7. Erin Craig - May 19, 2011

    Interestingly, one of the hot topics in climate change abatement is the role of regional planning in morphing our “built infrastructure” into one which purposefully helps minimize driving. This is opposite the trends of decades past where (for example) closed neighborhoods with lots of cul-de-sacs and regional shopping centers set apart, were all the rage. Changing General Plans and zoning laws is a slow way to bring change about, but it’s also a necessary one.
    In the meantime, I’ll keep my small efficient car. The correlation between vehicle size and safety is not reliable these days; while the Insurance Institute for Highway Safety does indeed give the 2011 Jeep Grand Cherokee its highest rating, the Nissan Leaf also earns it.

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