Fear of Switching Costs May Dampen Support for Phasing out Combustion Engine Cars

A PAPER BY A BOCCONI PHD CANDIDATE EXPLORES THE FACTORS THAT INFLUENCE THE PERCEPTION OF ENVIRONMENTAL POLICIES

Support for phasing out combustion-engine vehicles, contrary to what looks more plausible, may be negatively associated with retail gasoline prices. This is one of the conclusions of “Examining the effects of gasoline prices on public support for climate policies”, a paper by PhD candidate Ireri Hernandez Carballo of Bocconi’s Department of Social and Political Sciences and Matthew Ryan Sisco of Princeton University, published in Nature Energy.
 
When dealing with environmental policies, governments face a well-known dilemma, navigating between the necessity of tough measures to limit emissions and having to secure public support, or at least acceptance, for them. For this reason, what may or may not influence voters’ opinions about environmental policies is an increasingly important research area. The authors wanted to investigate specifically the relationship between the consumer price of gasoline and support for funding renewable energy research, regulating CO2 emissions, and requiring companies to pay carbon taxes. Gasoline prices are something people tend to monitor closely and are arguably the most common proxy for energy prices in general.
 
Hernandez and Sisco crossed data from individual-level surveys on Italian and U.S. metropolitan areas with variations in the retail price of gasoline. While they did not find significant associations between gasoline prices and policy support for funding renewable energy research, regulating CO2 emissions, or taxing fossil fuel companies, their analysis did show that support for phasing out combustion-engine vehicles is negatively associated with retail gasoline prices. In other words, as gasoline costs more, people are less favorable to banning fossil-fuel cars.
 
The absence of a correlation between fuel prices and support for funding renewable energy research, regulating CO2 emissions, or taxing fossil fuel companies can be explained by the tenuous perceived link between these issues and the lives of ordinary people. However, we might expect that rising gasoline costs would make phasing out combustion-engine vehicles more acceptable, not less. This apparent contradiction exists because there is a clash between environmental concerns and the fear that switching to alternative modes of transportation will be costly for families, with the latter being stronger in most cases. Evidence of this is the fact that lower-income individuals react to price increases with a bigger than average drop in support for phasing out combustion-engine cars.
 
“We find that rising gas prices lower support for phasing out combustion-engine vehicles for individuals that currently use a personal car as their main mode of transportation. We do not find this relationship among non-car users. This is consistent with the fact that gasoline price increases affect those who use a personal vehicle more immediately and directly compared with those who use other modes of transportation,” says Ireri Hernandez Carballo. “When gasoline prices are high, people tend to worry about the impact on their budget, particularly if their main mode of transportation is a gasoline-powered car. In times of economic uncertainty, it’s tough for owners of gasoline cars, a major purchase for most, to accept that their vehicle may become unusable in the future. Given our findings, we recommend that policymakers lower the cost of alternative and environmentally friendly modes of transportation, particularly when gasoline prices are high. This could mean increasing access to and affordability of public transportation, bicycles and safe biking lanes, and electric vehicles.”
 
Ireri Hernandez Carballo, Matthew Ryan Sisco, “Examining the effects of gasoline prices on public support for climate policies”, Nature Energy, 24 January 2024, DOI https://doi.org/10.1038/s41560-024-01449-2
 

by Andrea Costa