Speaker: Dr. Kenneth Gillingham, Yale University
Time: 15:00-17:00, Oct. 14, 2013
Venue: Rm. 714, SE Building

With the latest round of 2017-2025 Corporate Average Fuel Economy (CAFE) standards, the United States is committed to using standards as the primary policy instrument to reduce oil consumption and emissions. Yet standards are controversial, in part due to the possibility that automakers may down-weight vehicles in order to meet the standards, potentially leading to increased automobile fatalities and injuries. The relationship between fuel economy standards, automaker attribute choices, and fatalities depends on both the automaker response to fuel economy standards across an entire vehicle fleet and how changes to the distribution of attributes in the fleet translate to fatalities and injuries. This study (jointly with Antonio Bent from Cornell University and Kevin Roth from University of California at Irvine) examines how historical changes in CAFE standards have influenced product attribute choices across the entire vehicle line-up, from the promulgation of CAFE standards in 1978 to the present. We bring together comprehensive data on vehicle attributes and sales for all major automakers selling in the U.S. We examine the impact of changes in fuel economy on the quantiles of the unconditional distribution of weight using a regression of the recentered influence function of the unconditional quantile on the explanatory variables. The results are used to simulate how the distribution of weight in the vehicle fleet would change with tightened fuel economy standards.  We find clear evidence that automakers did not down-weight the entire product line-up in response to more tightly binding fuel economy standards, but rather focus on smaller to mid-sized vehicles. The total weight dispersion of the fleet is thus increased, leading to more fatalities and injuries than under a uniform down-weighting. This result highlights the complex consequences of fuel economy standard regulation.

Kenneth Gillingham is an assistant professor of economics at Yale University with appointments in the School of Forestry & Environmental Studies, Department of Economics, and School of Management. His research falls into the areas of energy and environmental economics and has most recently focused on the modeling of gasoline demand, technological change in climate policy, the economics of renewable energy policy, and the economics of energy efficiency. He has worked at the White House Council of Economic Advisers, Resources for the Future, and the Joint Global Change Research Institute in Washington, DC. He has publications in The Energy Journal, Energy Economics, Climate Change Economics, Marketing Science, Review of Environmental Economics & Policy, Energy Policy, and Annual Review of Resource Economics. While on a Fulbright Fellowship in New Zealand, he received an M.A. in economics from the University of Auckland. His Ph.D. is from Stanford University in management science and engineering and economics. He also holds M.S. degrees from Stanford University in both management science and engineering and statistics, and an A.B. with high honors from Dartmouth College.