Lose Some, Save Some: Obesity, Automobile Demand, and Gasoline Consumption in the U.S.

Abstract

This paper examines the unexplored link between the prevalence of overweight and obesity and vehicle demand in the United States. Exploring annual sales data of new passenger vehicles at the model level in 48 U.S. counties from 1999 to 2005, we find that new vehicles demanded by consumers are less fuel-efficient on average as a larger share of people becomes overweight or obese. The OLS results show that a 10 percentage point increase in obesity and overweight reduces the average MPG of new vehicles demanded by 1.4 percent, an effect requiring a 12 cent increase in gasoline prices to counteract. The 2SLS results after controlling for possible endogeneity in overweight and obesity prevalence put those two numbers at 5 percent and 54 cents, respectively. These findings, robust to a variety of specifications, suggest that policies to reduce overweight and obesity can have additional benefits for energy security and the environment.

Keywords: Obesity, fuel economy, gasoline consumption, vehicle demand

JEL Classification: Q50, R41, L62