Working Paper: CEPR ID: DP13859
Authors: Christopher Severen; Arthur Van Benthem
Abstract: An individual's initial experiences with a common good, such as gasoline, can shape their behavior for decades. We first show that the 1979 oil crisis had a persistent negative effect on the likelihood that individuals that came of driving age during this time drove to work in the year 2000 (i.e., in their mid 30s). The effect is stronger for those with lower incomes and those in cities. Combining data on many cohorts, we then show that large increases in gasoline prices between the ages of 15 and 18 significantly reduce both (i) the likelihood of driving a private automobile to work and (ii) total annual vehicle miles traveled later in life, while also increasing public transit use. Differences in driver license age requirements generate additional variation in the formative window. These effects cannot be explained by contemporaneous income and do not appear to be only due to increased costs from delayed driving skill acquisition. Instead, they seem to reflect the formation of preferences for driving or persistent changes in the perceived costs of driving.
Keywords: formative experiences; preference persistence; path dependence; driving behavior; gasoline price
JEL Codes: D12; D90; L91; Q41; R41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Formative experiences with gasoline prices (N72) | Driving behavior (R48) |
| 1979 oil crisis (N72) | Driving to work in 2000 (R48) |
| Doubling of real gasoline prices (ages 15-17) (N72) | Probability of driving to work later in life (J26) |
| Doubling of real gasoline prices (ages 15-17) (N72) | Public transit usage (L91) |
| Significant gasoline price increases during formative years (N72) | Annual miles driven as adults (J17) |
| Formative experiences with gasoline prices (N72) | Preferences for driving (R48) |
| Formative experiences with gasoline prices (N72) | Changes in perceived costs associated with driving (R48) |