If People Grasped the Full Cost of Cars, They Might Make Greener Choices

“If more consumers understood the total costs of car ownership it could promote a shift to cleaner, lower-emission alternatives, according to a new paper co-authored by an economist at the Yale School of Forestry & Environmental Studies (F&ES).

In a survey of more than 6,000 consumers in Germany, researchers found that people underestimate the total cost of vehicle ownership by €221 ($240) per month on average. Although they correctly estimated their spending on fuel on average, they “severely” underestimated all other major expenditures, including depreciation, repairs, taxes, and insurance. The misjudgment amounts to 52 percent of the actual costs.

We discuss a set of potential solutions. For example, rather than having a label on new cars only showing the future fuel costs, the label could include the full expected monthly costs of ownership.
— Kenneth Gillingham
If these consumers were aware of the true costs, the researchers then calculate, it could reduce the number of cars in Germany by as much as 17.6 million, or 37 percent.

“If people underestimate how much it costs to own a car, they are more likely to own cars, rather than use other, cleaner, modes of transportation,” says Kenneth Gillingham, an associate professor of environmental and energy economics at F&ES and corresponding author of the paper. “And because repair costs are higher for conventional gasoline-powered cars, the underestimation could affect the uptake of electric vehicles as well.”

The researchers suggest that these miscalculations can be used as leverage in creating new policies that promote cleaner transportation choices — for instance, car sharing, alternative-fuel vehicles, public transport, biking or walking.”

Source: If People Grasped the Full Cost of Cars, They Might Make Greener Choices

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