Behaviours of entire generations such as that of the baby boomers and the millienials and their influence on the economy has been a matter of interest for policy makers. But now, it seems like policy makers are delving deeper on this subject. Christopher Severen at the Federal Reserve Bank of Philadelphia has analysed the behaviour of people born in 1964 when it comes to car ownership and usage, which is distinctly different (averse) from the generation preceeding or following them. Severen attributes this aversion to the oil price spike in 1979, a time when these people would be coming of age and learning to drive.
The economists analyzed millions of government survey responses from the 1960s through the 2010s and found it wasn’t just the Iran oil crisis. Gas prices left scars whenever and wherever they spiked throughout that period.
If inflation-adjusted gas prices doubled while someone was learning to drive, they found, that person would be less likely to drive to work later on, and would drive an average of 900 to 1,100 fewer miles each year as adults. They are also less likely to own gas-guzzling light trucks and more likely to take public transit.
“We find that pretty surprising,” Severen said. “In the U.S. most people drive to work and not much has budged that over the past few decades.”
Drivers are only vulnerable to this level of scarring during that narrow slice of their teenage years when they’re just learning to drive. When prices jump, scars don’t appear in folks who were younger than 15 or older than 18. In some analyses, the researchers shifted the window to fit each state’s driving-age requirements.
“You develop a particular taste for driving from this formative window of when you’re roughly 15 to 18, and that’s influenced by gas-price volatility during that period,” Severen said. “People who experience these large shocks have a lower taste for driving.”
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