How do consumers use engine efficiency? On bigger, faster cars.
Engine efficiency has vastly improved in recent decades, but that has made cars bigger and faster, rather than more fuel-efficient
Engine efficiency has vastly improved in recent decades, but that has made cars bigger and faster, rather than more fuel-efficient
Auto companies聽have made great strides in improving engine efficiency in recent decades. But those improvements haven鈥檛 done much to improve the fuel economy of America鈥檚 passenger car fleet.聽Instead, consumers have 鈥渟pent鈥澛爉ost of those efficiency improvements on bigger, faster cars.
MIT economist Christopher Knittel has carefully quantified these tradeoffs in a聽recent paper in the American Economic Review (pdf; earlier ungated version here).聽As noted by Peter Dizikes of MIT鈥檚 News Office:聽
This is a fine聽example of a very common聽phenomenon: consumers often 鈥渟pend鈥� technological improvements in聽ways that partially offset the direct effect of the improvement. If you make engines more efficient, consumers purchase heavier cars. If you increase fuel economy, consumers drive more. If you give hikers cell phones, they go to riskier places. If you make low-fat cookies, people eat more. And on and on. People really do respond to incentives.