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In 2018, California voters rejected Proposition 6, a ballot initiative that sought to repeal state gasoline taxes and vehicle fees enacted as part of the 2017 Road Repair and Accountability Act. This paper examines the relationship between support for the proposition, political ideology and the economic burdens imposed by the Act. For every hundred dollars of annual per-household costs imposed by the Road Repair and Accountability Act, support for proposition rose by 3–5 percentage points, roughly comparable to a commensurate increase in the share of ”liberal” voters. Notably, the relationship between voting and the economic burden of the policy is seven times strong in the most conservative tracts relative to the most liberal tracts. This heterogeneity has important implications for the popular support for environmental taxes, as conservative areas in California and elsewhere tend to bear a higher burden from transportation and energy taxes than liberal areas.View the NCST Project Webpage

This report presents evidence that gasoline prices have a larger effect on demand for battery electric vehicles (BEVs) than do electricity prices in California. A spatially-disaggregated panel dataset of monthly BEV registration records was matched to detailed records of gasoline and electricity prices in California from 2014-2017, and the matched data was used to estimate the effect of energy prices on BEV demand. Two distinct empirical approaches (panel fixed-effects and a utility-border discontinuity) yield remarkably similar results: a given change in gasoline prices has roughly four times the effect on BEV demand as a similar percentage change in electricity prices.

The operational costs of electric vehicles are lower than those of gas-powered vehicles. This advantage is often cited by manufacturers, advocates, and policy-makers as a significant benefit of driving electric vehicles. Yet, the question of how consumers value operational costs when purchasing an electric vehicle is largely unexplored. While prior research has suggested that gasoline prices are an important factor for conventional vehicle buyers, consumers may not have the same awareness of electricity prices as they do for salient gasoline prices. The question of whether consumers accurately assess the costs and benefits of using electricity as a transportation fuel has important implications for electric vehicle adoption and for achieving deep decarbonization of the transportation sector through electrification.

California has adopted aggressive vehicle electrification goals as a means of reducing urban air pollution, carbon emissions, and overall petroleum consumption. The state has several programs to encourage electric vehicle adoption, including the Enhanced Fleet Modernization Program, which was initially piloted in two California air districts and recently expanded to other regions. The program offers subsidies to low- and middle-income residents to scrap their old higher-polluting vehicle and purchase lower-polluting hybrid, plug-in hybrid, and battery electric vehicles, with more generous incentives for residents in disadvantaged zip codes. The extent to which this and other incentive programs help to achieve environmental policy goals depends on the emissions reduced by electric vehicles, and the emissions of the vehicle that would have been purchased had the consumer not chosen an electric vehicle. A household that purchases an electric vehicle will generate a larger environmental benefit if it would have otherwise purchased a gas guzzler rather than a gas sipper. The choice of replacement vehicle also has important implications for projecting future fuel tax revenues. If EVs replace gas sippers, fuel tax revenues will decline more slowly. If they replace gas guzzlers, fuel tax revenues will decline more quickly. To answer these questions, researchers at UC Davis compared the average fuel economy of vehicles purchased in disadvantaged zip codes inside and outside of air districts participating in the Enhanced Fleet Modernization Program, before and after the program began. This quasiexperimental design gives a reasonable estimate of what would have happened without the subsidy.

The true net environmental benefit of an electric vehicle is relative to the vehicle that an electric vehicle buyer would have bought and driven had they not opted for an electric vehicle. This “counterfactual” vehicle cannot be observed, but its fuel economy can be estimated. We use quasi-experimental variation in a generous California electric vehicle subsidy program to show that buyers of electric vehicles would have, on average, purchased fuel-efficient gasoline-powered cars had they not gone electric.

Policy makers consider electric vehicles (EVs) an important policy lever to reduce urban air pollution, lower carbon emissions, and reduce overall petroleum consumption. The need to understand purchase patterns for EVs is especially important in light of the bold policy targets set for increasing EV penetration or phasing out internal combustion engines (ICEs) entirely in countries around the world and in California.This policy brief summarizes findings from the project which analyzed data on every EV, including plug-in hybrid (PHEV) and battery electric vehicle (BEV), purchased in California from 2011 to 2015 and random samples of comparable conventional and hybrid vehicles. It examined the proliferation of EVs during a period in which the market has matured to include new technologies, a growing secondary market has evolved, and a suite of policies has been put in place to promote switching away from gasoline-powered cars. Researchers analyzed the data to answer two questions. First, is the conventional wisdom, which suggests that EV adoption is more common among high-income households and less common among minority groups, reflected in purchase data? Second, do two plausible barriers impede low-income and minority car buyers’ adoption of EVs: price discrimination against groups traditionally unlikely to purchase EVs and availability of EVs at dealerships near low-income or minority communities.View the NCST Project Webpage

Little is known about demand for EVs in the mass market. In this paper, we exploit a natural experiment that provides variation in large EV subsidies targeted at low- and middle-income households in California. Using transaction-level data, we estimate two important policy parameters using triple differences: the subsidy elasticity of demand for EVs and the rate of subsidy pass-through. Estimates show that demand for EVs amongst low- and middle-income households is price-elastic and pass-through is complete. We use these estimates to calculate the expected subsidy bill required for California to reach its goal of 1.5 million EVsby 2025.

This research project explores the plug-in electric vehicle (PEV) market, including both Battery Electric Vehicles (BEVs) and Plug-in Hybrid Electric Vehicles (PHEVs), and the sociodemographic characteristics of purchasing households. The authors use detailed micro-level data on PEV purchase records to answer two primary research questions. Their results confirm that low-income households exhibit a lower share of PEV purchases than they do for conventional, internal combustion engine (ICE) vehicles. Households with annual income less than $50,000 comprise 33 percent of ICE purchases and only 14 percent of PEVS. By comparison, high-income households earning more than $150,000 annually comprise only 12 percent of ICE purchases and 35 percent of PEV purchases over their sample period. Similarly, unsurprising patterns can be seen across ethnicities. For example, non-Hispanic Whites represent 41 percent of ICE purchases but 55 percent of PEV purchases, as compared to Hispanics (38 percent of ICE and 10 percent of PEVs) and African Americans (3 percent of ICEs and 2 percent of PEVS). These differences naturally raise questions about barriers to PEV adoption among low-income and minority ethnic populations. By comparing outcomes in the ICE, hybrid, and PEV markets across income and ethnic groups, the authors are able to test whether price discrimination and barriers to market access are higher in PEV markets for low-income and minority ethnic groups. The authors find that, overall, they are not, although there are mixed results for the used PEV market. In general, non-white, low-income populations face higher prices in the used PEV market, relative to a baseline, than they do in the new PEV market. While some people travel farther to buy used PEVs than they do to buy used ICE vehicles, there is not a pattern that would indicate systematic discrimination (e.g. Hispanics travel farther to buy used PHEVs but less far to buy used BEVs). While the authors admit that their empirical approach cannot control for all potential vehicle composition effects, the authors view their results as being most consistent with a market that provides access to all ethnicities and income groups.View the NCST Project Webpage

Adoption of alternative fuel vehicles by African-American, Hispanic and low-income consumers has lagged adoption by Asian, White and high-income consumers. Understanding the low-rate of adoption for certain demographic groups is of particular interest to California. In 2015, the Clean Energy and Pollution Reduction Act (SB 350) was signed into law and requires the California Air Resources Board (CARB) to study barriers to zero-emission transportation options faced by low-income consumers. This study analyzes data for over 400,000 California vehicle sales between 2011and 2015, containing information on the price paid by the consumer, the location of dealership, the zip code of the buyer and buyer demographic characteristics (e.g., race, gender, income, age) for each transaction. Researchers test for the presence of two commonly asserted barriers to electric vehicle (EV) adoption: (1) price discrimination against low-income consumers and (2) limited selection of EVs at dealerships proximate to disadvantaged communities, by comparing the prices and distance traveled for buyers of EVs in different demographic groups.  As a control, researchers compare EV sales to sales of internal combustion engine (ICE) cars. Researchers find little evidence that price discrimination amongst demographic groups or differences in EV availability explain low rates of EV adoption.

Can data from mobile phones be used to observe economic shocks and their consequences at multiple scales? Here we present novel methods to detect mass layoffs, identify individuals affected by them and predict changes in aggregate unemployment rates using call detail records (CDRs) from mobile phones. Using the closure of a large manufacturing plant as a case study, we first describe a structural break model to correctly detect the date of a mass layoff and estimate its size. We then use a Bayesian classification model to identify affected individuals by observing changes in calling behaviour following the plant's closure. For these affected individuals, we observe significant declines in social behaviour and mobility following job loss. Using the features identified at the micro level, we show that the same changes in these calling behaviours, aggregated at the regional level, can improve forecasts of macro unemployment rates. These methods and results highlight promise of new data resources to measure microeconomic behaviour and improve estimates of critical economic indicators.

A standard result in regulation is that efficiency requires that marginal prices be set equal to marginal costs. This paper performs an empirical test of marginal cost pricing in the natural gas distribution market in the United States during the period 1989-2008. For all 50 states we reject the null hypothesis of marginal cost pricing. Departures from marginal cost pricing are particularly severe in residential and commercial markets, where we find average markups of over 40%. Based on conservative estimates of the price elasticity of demand these distortions impose hundreds of millions of dollars of annual welfare loss. Moreover, the current pricing schedules are an important pre-existing distortion which should be taken into account when evaluating carbon taxes and other policies aimed at addressing external costs. Current markups for residential and commercial customers are already equivalent to a tax of over $200 per metric ton of carbon, considerably higher than the range envisioned by most economists.

Abstract We examine the private and public economics of electric vehicles (EVs) and discuss when market forces can be expected to produce the optimal path of EV adoption. Privately, consumer cost savings from EVs vary. Some experience net benefits from choosing gasoline cars, even after accounting for EV subsidies. Publicly, we survey the literature documenting the external costs and benefits of EVs and highlight several themes for optimal policy design. These include (1) promoting regional variation in EV policies that align private incentives with social benefits, (2) pursuing a time-path of policies that reflects changing marginal benefits, and (3) rationalizing electricity and gasoline prices to reflect their social marginal cost. On the one hand, research suggests optimal policy be front-loaded and then ramp down over time as industries gain experience in EV production and as charging infrastructure is put in place. On the other hand, as electricity generation becomes cleaner over time, environmental considerations may favor increasing subsidies as the environmental benefits of driving EVs rise relative to conventional vehicles. [ABSTRACT FROM AUTHOR]