David Rapson, Professor, Department of Economics, University of California, Davis.
California has committed to reducing overall statewide GHG emissions by 40% below the 1990 levels by 2030 through Senate Bill 32 (SB 32, the California Global Warming Solutions Act of 2006). In order to achieve this goal, significant changes in household transportation choices must be made.
This study analyzed multi-year statewide household vehicle-level data to explore the entire process of household vehicle choice, holding, and usage. By using frontier statistical approaches grounded in economic modeling, the researchers have advanced the understanding of how consumers make decisions that influence the evolution of the vehicle fleet in California. Results indicate that there are important differences across households in the sensitivity of travel and vehicle choice to the price of gasoline. The researchers are the first to estimate a “portfolio effect” in household vehicle purchases, where attributes of one car affect the revealed desired choice of another. The research shows that this effect influences the turnover of the fleet, and potentially erodes energy savings from fuel economy standards.
Finally, the researchers developed a new model of vehicle choice and driving that incorporates key features of the decision-making process of forward-looking consumers. These innovations provide important insights into the effects of policies to further reduce transportation emissions in California.
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