Are Consumers Poorly-Informed about Fuel Economy? Evidence from Two Experiments

Hunt Allcott and Christopher R. Knittel,

March 2017

It has long been argued that people are poorly-informed about and inattentive to fuel economy when buying cars, and that this causes us to buy low-fuel economy vehicles despite our own best interest. We test this assertion by running two experiments providing fuel economy information to people shopping for new vehicles. We find zero statistical or economic effect of information on average fuel economy of vehicles purchased. In the context of a simple optimal policy model, the estimates suggest that imperfect information and inattention are not valid as significant justifications for fuel economy standards at current or planned levels.

Keywords: Behavioral public economics, fuel economy standards, field experiments, information provision.

JEL Codes: D12, D83, L15, L91, Q41, Q48.