Could there be an easy way to discourage people from buying cars?

According to a new study, car ownership is a lot more expensive than most people believe, and if consumers knew the true cost, they might be less likely to even purchase a car.

In Short: Most car owners underestimate the day-to-day cost of owning a car, by 50%. If consumers knew the true cost of car ownership before they purchased a vehicle, only 3 out of 5 people would still choose to buy a car. This is a powerful example of how information can be used to change consumer behaviour to impact environmental policy.

Decreasing the number of cars on the road is a simple way to decrease global carbon emissions.

Governments around the world are trying to lower their country’s carbon dioxide emissions to reduce the impact of human-caused climate change. Nearly a quarter of emissions are due to transportation, and private car ownership accounts for more than 10% of global CO2 emissions. 

Decreasing the number of gasoline-fueled cars on the road is a simple way to decrease carbon dioxide emissions, but global car ownership has been increasing. This has been due to growing incomes, greater mobility, and longer distances people must travel to work, as well as the expensive up-front cost of electric cars, difficulties in charging those electric cars, and shortcomings in infrastructure for public transit.

When many people are deciding whether or not to buy a car, they consider not just the cost of purchasing a car, but the long-term costs of owning a car. If they underestimate the cost of car ownership, this might encourage more people to buy a car, leading to higher carbon emissions over time.

In a new study by four economists that surveyed more than 6000 German households, Andor and their colleagues found that most people drastically underestimate the cost of car ownership. The researchers considered the main costs associated with car ownership and tried to estimate how consumers might make different choices if they had more information available. The four costs they considered were:

1. Fuel Costs: how much do you spend on gasoline for your vehicle?

2. Depreciation Value: how much money can people typically resell your type of vehicle for?

3. Repair Costs: how much does it cost to fix your car if/when it breaks down?

4. Taxes & Insurance: how much tax will you pay on your car, and how expensive will your car insurance be?

Based on the survey results, at least 90% of people considered fuel costs and taxes/insurance in their decision-making; however, just over 50% of owners considered repair costs, and less than 30% factored in their vehicle’s depreciation value. Taken together, people underestimate the cost of owning a car by about 50%, and overestimate their car’s resale value.  It’s not known why people underestimate these costs, but if these people were given personalized information about the true cost of owning a car before they purchased it, 37% would not have purchased their car. The researchers estimated that this decision would result in more than a 20% decrease in carbon emissions.

Previous research has been done in the US to determine what effect cost has on whether or not someone decides to purchase a car. When customers know that the true cost of car ownership is higher than initially thought, they are less likely to own car. But this information must be available before they purchase the car.

Andor and their colleagues acknowledge that other initiatives may decrease car ownership, such as making public transit free, but they believe this would have less of an impact than making future car owners aware of the full cost of ownership. This strategy is not perfect, though, as many people do not live in dense cities or have reliable public transit, and many people own cars as a status symbol. Considering this, public information campaigns may be an inexpensive way to inform consumers and effectively influence their purchasing decisions, when possible.

The researchers believe that the results from this German study can apply to other countries as well. But future surveys should also look at how people may change their behaviour if they choose to not own a car. Will they walk more, carpool, ride a bike, take public transit, or some combination of those options? This information can help governments invest in transportation infrastructure to support their citizens and reduce their carbon emissions in the fight against climate change.

The full study can be found here in the journal Nature (and it is free to access, including the supplemental data).