Are Consumers Willing to Pay to Let Cars Drive for Them? Analyzing Response to Autonomous Vehicles

Abstract

Autonomous vehicles use sensing and communication technologies to navigate safely and efficiently with little or no input from the driver. These driverless technologies will create an unprecedented revolution in how people move, and policymakers will need appropriate tools to plan for and analyze the large impacts of novel navigation systems. In this paper we derive semiparametric estimates of the willingness to pay for automation. We use data from a nationwide online panel of 1,260 individuals who answered a vehicle-purchase discrete choice experiment focused on energy efficiency and autonomous features. Several models were estimated with the choice microdata, including a conditional logit with deterministic consumer heterogeneity, a parametric random parameter logit, and a semiparametric random parameter logit. We draw three key results from our analysis. First, we find that the average household is willing to pay a significant amount for automation: about $3,500 for partial automation and $4,900 for full automation. Second, we estimate substantial heterogeneity in preferences for automation, where a significant share of the sample is willing to pay above $10,000 for full automation technology while many are not willing to pay any positive amount for the technology. Third, our semiparametric random parameter logit estimates suggest that the demand for automation is split approximately evenly between high, modest and no demand, highlighting the importance of modeling flexible preferences for emerging vehicle technology.

Keywords: willingness to pay, autonomous vehicle technology, discrete choice models, semiparametric heterogeneity

JEL Classification: C25, D12, Q42