64 Pages Posted: 23 Jan 2017
Date Written: January 2017
It is often asserted that consumers are poorly informed about and inattentive to fuel economy, causing them to buy low-fuel economy vehicles despite their own best interest. This paper presents evidence on this assertion through two experiments providing fuel economy information to new vehicle shoppers. Results show zero statistical or economic effect on average fuel economy of vehicles purchased. In the context of a simple optimal policy model, the estimates suggest that current and proposed U.S. fuel economy standards are significantly more stringent than needed to address the classes of imperfect information and inattention addressed by our interventions.
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