Formative Experiences and the Price of Gasoline

79 Pages Posted: 23 Jul 2019 Last revised: 14 Feb 2021

See all articles by Christopher Severen

Christopher Severen

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Arthur van Benthem

University of Pennsylvania - Business & Public Policy Department

Multiple version iconThere are 2 versions of this paper

Date Written: July 2019

Abstract

Formative experiences shape behavior for decades. We document a striking feature about those who came of driving age during the oil crises of the 1970s: they drive less in the year 2000. The effect is not specific to these cohorts; price variation over time and across states indicates that gasoline price changes between ages 15–18 generally shift later-life travel behavior. Effects are not explained by recessions, income, or costly skill acquisition and are inconsistent with recency bias, mental plasticity and standard habit-formation models. Instead, they likely reflect formation of preferences for driving or persistent changes in its perceived cost.

Suggested Citation

Severen, Christopher and van Benthem, Arthur, Formative Experiences and the Price of Gasoline (July 2019). NBER Working Paper No. w26091, Available at SSRN: https://ssrn.com/abstract=3423804

Christopher Severen (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

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Arthur Van Benthem

University of Pennsylvania - Business & Public Policy Department ( email )

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Philadelphia, PA 19104-6372
United States
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