Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect

Kenneth A. Small and Kurt Van Dender

The Energy Journal, 2007, vol. 28, issue 1, 25-52

Abstract: We estimate the rebound effect for motor vehicles, by which improved fuel efficiency causes additional travel, using a pooled cross section of US states for 1966-2001. Our model accounts for endogenous changes in fuel efficiency, distinguishes between autocorrelation and lagged effects, includes a measure of the stringency of fuel-economy standards, and allows the rebound effect to vary with income, urbanization, and the fuel cost of driving. At sample averages of variables, our simultaneous-equations estimates of the short- and long-run rebound effect are 4.5% and 22.2%. But rising real income caused it to diminish substantially over the period, aided by falling fuel prices. With variables at 1997-2001 levels, our estimates are only 2.2% and 10.7%, considerably smaller than values typically assumed for policy analysis. With income and starting fuel efficiency at 1997-2001 levels and fuel prices 58 percent higher, the estimates are still only 3.1% and 15.3%, respectively.

Keywords: Carbon dioxide; Fuel economy; travel demand; motor vehicle use; rebound effect; US (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:28:y:2007:i:1:p:25-52

DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No1-2

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