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

41 Pages Posted: 26 Jun 2009 Last revised: 20 Jan 2014

Shanjun Li

Cornell University - School of Applied Economics and Management

Yanyan Liu

World Bank

Junjie Zhang

University of California, San Diego

Date Written: June 25, 2009

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

Suggested Citation

Li, Shanjun and Liu, Yanyan and Zhang, Junjie, Lose Some, Save Some: Obesity, Automobile Demand, and Gasoline Consumption in the U.S. (June 25, 2009). Available at SSRN: https://ssrn.com/abstract=1425773 or http://dx.doi.org/10.2139/ssrn.1425773

Shanjun Li (Contact Author)

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States

Yanyan Liu

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Junjie Zhang

University of California, San Diego ( email )

9500 Gilman Dr #0519
La Jolla, CA 92093
United States
858-822-5733 (Phone)

HOME PAGE: http://pages.ucsd.edu/~junjiezhang/

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