Re-searching for hidden costs: Evidence from the adoption of fuel-saving technologies in light-duty vehicles

Abstract

A variety of fuel-saving technologies have been implemented in light-duty vehicles since 2012 under the U.S. Environmental Protection Agency’s (EPA) and Department of Transportation (DOT)’s light-duty vehicle greenhouse gas emissions and fuel economy standards. Questions have arisen whether there are hidden costs that have not been included in the net benefit calculations as a result of adoption of the new technologies. In this paper, we replicate and expand results from Helfand et al. (2016). We define hidden costs of the new technologies as problems with operational characteristics such as acceleration, handling, ride comfort, noise, braking feel, and vibration, not all of which are easily measured by objective criteria. We overcome the empirical challenge by using data coded from online professional auto reviews that qualitatively evaluate fuel-saving technologies and operational characteristics for model years 2014 and 2015 vehicles. We estimate relationships of fuel-saving technologies and operational characteristics, including an overall vehicle assessment, and find little correlation of hidden costs with the technologies themselves. Variable quality of implementation of technologies across automakers may better explain negatively evaluated operational characteristics. The results imply that automakers have typically been able to implement fuel-saving technologies without harm to vehicle operational characteristics.