The Household Vehicle Portfolio: Implications for Emissions Abatement Policies

Speaker: David Rapson, Associate Professor of Economics, University of California, Davis

Discussant: Xavier Labandeira, Director, FSR Climate 

This seminar will illustrate the paper ”The Household Vehicle Portfolio: Implications for Emissions Abatement Policies” (David Rapson with Ken Gillingham and Chris Knittel)

This paper quantifies the extent to which multi-car households exhibit preferences for a diversified vehicle portfolio. We deploy a novel identification strategy to examine how an exogenous change in the fuel economy of a kept vehicle affects a household’s choice of a second vehicle purchased. This has potential implications for the relative long-run effectiveness of greenhouse gas abatement initiatives such as fuel economy standards and a price on carbon. Results indicate a strong preference for a diverse portfolio in fuel-economy. They highlight the importance of our instrumental variables approach and the pitfalls that arise when using between-household, rather than within-household, variation. Results imply that the potential gasoline savings from exogenously increasing fuel economy of the kept vehicle are eroded significantly by the average household’s subsequent desire for a less efficient second car.

David Rapson is an Associate Professor of Economics at the University of California at Davis, currently visiting Carlos III University in Madrid. Rapson’s research focuses on energy economics, environmental policy, and industrial organization. Many of his research projects involve collaboration with electric utility companies and government regulatory agencies, with a focus on informing policy decisions in the transportation and electricity sectors. His research includes the evaluation of dynamic electricity pricing regimes, carbon offset programs, and the design and analysis of large-scale randomized field experiments to test the role of information and prices on consumer electricity demand. An area of ongoing research interest explores carbon abatement in the transportation sector. Rapson’s research appears in the American Economic Review, Nature, and other academic journals. He holds an AB in economics from Dartmouth College; an MA in economics from Queen’s University; and a Ph.D. in economics from Boston University. Professor Rapson is currently an Associate Editor of the Journal of Economic Behavior and Organization, and sits on the Editorial Council of the Journal of the Association of Environmental and Resource Economists.