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July 08, 2008

Why Rising Prices Don't Affect Behavior That Much

Via Glenn Reynolds, all the hyperbolic hand-waving on the nightly news aside, rising gas prices don't seem to have had much of an effect on local leadfoots:

TIGERHAWK LOOKS AT GASOLINE PRICES AND BEHAVIOR MODIFICATION, and doesn't find much of the latter. "When I pulled on to the New Jersey Turnpike I set my cruise control at 66 mph (substantially faster than I would drive -- 55 or so -- if I wanted to maximize my fuel economy), got in the right lane, and started counting cars that passed me. I was passed by more than 40 cars before I came up behind another vehicle going more slowly than me, and it was a step van trying to exit. I gave up counting when more than 100 cars passed me without me passing anybody. At 66 miles per hour."

Yeah, I noticed that people weren't slowing down much this weekend -- and where they were it seemed more connected with the heavy holiday-weekend police presence in a few areas than with fuel-saving, because once the cops were gone people sped up again.

UPDATE: From the comments: "Virtually nobody is willing to substitute their time for the money they would save slowing down, and several have offered very cogent economic reasons why they would not. It is a little indication of the enormous cost to the economy and to our personal freedom imposed by the government actually mandating a 55 mph speed limit."

But it's not just a question of time. The time vs. money tradeoff has been exaggerated, too. In real terms (how long does it take the average American to earn a gallon of gasoline) the price of gas has not gone up as drastically as we've been lead to believe:

As Americans know, today’s rising food and energy prices are crimping household budgets. But there are other ways to understand the relative size of the rise of food and energy costs. For example, in terms of time worked at the average pay rate, the real cost of a 12-item basket of basic foods has hardly budged. And while the work-time price of gasoline doubled in recent years, a gallon of gasoline still goes for less than 11 minutes of work (Fig. 3). At 20 miles per gallon, an hour of work will get you 110 miles down the road; at 30 mpg, you can go 165 miles.

Figure 3- What Work Buys.jpg

When it comes to how hard we have to work for food and fuel, we still face far lower burdens than our grandparents did. Living standards rise on the ability to use productive resources to churn out more goods and services—that is, to advance productivity. As the economy has become more productive decade by decade, Americans have reaped the gains, first and foremost by consuming more.

There’s more to the good life than goods and services, however, and we’ve taken some of our added productivity in other ways. We’ve gained more leisure time, improved our working conditions, enhanced safety and security, and added variety to our choice set. All of these benefits become increasingly important as we climb up the income ladder.

The lament-filled anecdotes about long hours and low pay just don’t stand up to the test of hard data. Real total compensation—wages plus fringe benefits, both adjusted for inflation—has been rising steadily for several generations (Fig. 4). Over time, the fringes have become a larger share of the rewards for work, dampening the statistics on wage increases. At the same time, we’re spending less time at work. An average workweek has fallen from 39.8 hours in 1950 to 36.9 hours in 1973 to 33.8 hours today.

Fig 7- Less Work, More Leisure-final.jpg

So if you're wondering why all the gloom and doom at the gas pump doesn't translate into behavior modification on the highways, it's easy.

We can afford to drive fast. We have more leisure time and more money, relatively speaking, than our grandparents did. So increases in the price of gas and groceries don't impact us as much.

Thanks to OBH for the tip.

Posted by Cassandra at July 8, 2008 12:11 PM

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Comments

I think people's driving behaviors are changing, slightly. Anecdotal evidence from the weekend: we had an annual family function "Up North" about 250 miles. We drove, which we've done for years. Others drove, too, or flew into a local city and rented and then drove. But attendance was much lower this year, and there was a great deal more carpooling. On the road, while the speeds were still above the limit, the traffic was lighter going north and much lighter coming home on Sunday; the homeward trip typically is five to seven hours, but this time it was barely four. We didn't see nearly as many RVs and vehicles towing trailers with bikes, boats, ... either.

Small changes. Not sure what the long-term effect will be.

Posted by: htom at July 8, 2008 12:51 PM

I came across this company, GasBankUSA while cruising the web. Here is the site that talks about fixed price gasoline, http://www.gasbankusa.com

Posted by: Jimmy Walsh at July 8, 2008 01:04 PM

I'm a huge driver - I'll get in the car and drive anywhere.

The spousal unit and I argued all weekend about gas prices, though :p

It was pretty funny. Fortunately he has a sense of humor (or else my jokes must be getting funnier)... or maybe he just likes not sleeping alone at night.

[drum roll]

It got to be kind of a running joke. Need to buy coffee at the store again. Aieeee!!! Prices are going up! (dang... must be the price of gas)

Interest rates on the rise? Ripple effect... oil prices... [incoherent mumbling from passenger seat of car..."What did you say?" "Oh nothing, dear."]

Butterfly collides with windshield.

DAMN! Must not have been able to take these rising gas prices.... can you blame the poor bastid?

*batting eyelashes innocently*

Posted by: Cassandra at July 8, 2008 01:18 PM

In the So California area, there seems to be more of an emphasis on carpooling, and we have several people who would prefer to drive to the office, but do not. Instead they live far enough away where choosing the option to work at home or take the train in is more viable. Also, with the increase in prices, we're seeing more flexible work hours to avoid heavy traffic hours and sitting in the car burning fuel.

Posted by: Kevin L at July 8, 2008 01:22 PM

Thanks, Jimmy. Very interesting.

I will have to think about that site. FWIW, I'm not arguing that prices have no effect on behavior. They do, obviously. I'm just saying that for many people in the short term, they haven't gone up high enough relative to our disposable income and the amount of time it takes us to earn a gallon of gas, for the pain level to impact our behavior significantly.

Posted by: Cassandra at July 8, 2008 01:25 PM

"Butterfly collides with windshield.

DAMN! Must not have been able to take these rising gas prices.... can you blame the poor bastid?"

Soooo.........it committed insecticide?

*sort sort*
*sicker*

Posted by: Ahnold Horseshaaack(ptooie) at July 8, 2008 01:27 PM

Here people still seem to be commuting. I live over an hour away from my office and the traffic is still horrendous. Luckily I don't have to go in often, but I've not noticed any dimunition in traffic.

Posted by: Cassandra at July 8, 2008 01:27 PM

What interests me about the ripple effect is what it does and doesn't touch. We were looking at food prices yesterday. Organic tomatoes? Five bucks a pound.

Canned beans? Same price as usual, .78 cents a can -- but on sale today for fifty-eight cents a can!

Beer prices are way up (@#&$@!), but wine prices seem unchanged, as near as I can tell -- I don't usually drink wine, so the prices don't make a big impact on my consciousness.

Milk? Huge increase in price.

I could go on a while, but you get the idea. There really is a ripple-effect, but its highly uneven and I don't quite understand why it appears where it does. Goods that need regular replacement seem to be higher (like produce and milk), but liquids seem uneven (milk much higher, beer less high, wine untouched); and things that require extra weight to ship (like canned beans v. dry beans) don't seem to have responded to the gas increase at all.

Posted by: Grim at July 8, 2008 01:30 PM

Just get yourself a couple of big-a$$ed speeding tickets. Remarkable fuel savings are practially guarateed for a year, maybe more.

Posted by: spd rdr at July 8, 2008 01:33 PM

Beer prices are way up (@#&$@!), but wine prices seem unchanged, as near as I can tell -- I don't usually drink wine, so the prices don't make a big impact on my consciousness.

Beer prices are being kept artificially low due to lowering consumption (vis a vis wine and, particularly, spirits). The cost of barley has doubled in the last 12 months and the price of hops is through the roof. Brewers are forbidding their distributors to pass on fuel adjustments to retailers (hence to consumers), and the margins are beginning to get razor thin. Look for big (upward) adjustments at the end of the summer.

Posted by: spd rdr at July 8, 2008 01:38 PM

Well, I can tell you this, since gas spiked up at the end of May I don't see nearly as many people at work as I did before. There are only a handful of cars in the lot. People must be working from home.

That is all I know.

Posted by: Pile On at July 8, 2008 02:10 PM

Pile....:p

[tapping foot]

Posted by: Cassandra at July 8, 2008 02:28 PM

Look for big (upward) adjustments at the end of the summer.

Yipe. It seemed like a pretty steep adjustment already, given the relatively low price of a six pack of beer. I'm only talking about two bucks per six pack; but it only cost six to eight bucks to start with, so that's a 25-33% cost increase in two months time.

Of course, if materials costs are up 100%, that's obviously not enough.

Posted by: Grim at July 8, 2008 03:20 PM

Yes?

Posted by: Pile On at July 8, 2008 03:21 PM

Look for big (upward) adjustments at the end of the summer.

He stands athwart the supply/demand curve like Leonidas at the Gates of Thermopylae. Should the shadow of high beverage prices harsh your collective mellow then you shall drink beer in the shade, my friends.

Posted by: Cassandra at July 8, 2008 03:32 PM

It's all about perspective. How much would you pay for a cold beer the middle of the desert on a hot day? Good news: it's cheaper at the 7-11 on the corner.

Posted by: spd rdr at July 8, 2008 06:29 PM

Well, since I spent no money on beer for six months of the last twelve, I think I'll come out ahead for the year no matter what. :)

Posted by: Grim at July 8, 2008 07:10 PM

I'd read (and commented on) TigerHawk's post yesterday. I agree with the time=money, and for the driving I do, the savings on gas don't outweigh the savings in time.

Interesting perspective I heard on the radio, coming home from work today, though. I was listening to Joe Pags on WOAI out of San Antonio. The topic was Warner's proposal to mandate a national 55-mph speed limit. Joe had apparently spoken with a long-haul trucker (he said they listen to his show a lot...) about the proposed change:

Truckers, by law, are to drive for no more than 11 hours before having to take a 10 hour break from the roads. Given a trucker having a 700-mile haul, he could, with the current speed limit, make that trip in one day and beat the 11 hour restriction on driving. Make driving 55 the law of the land? He can now only drive about 550 miles in the time it took him to drive 700 before. Now, he still has 150 miles to go, but now he has to get off the road for 10 hours - that will cost that trucker money in the form of a hotel stay and meals he didn't have to pay for before. That, and what took a day to get delivered before is now taking more like a day and a half. Something I hadn't considered, but something that will cost everyone, I think...

Posted by: Miss Ladybug at July 8, 2008 07:40 PM

Grim:
Well, since I spent no money on beer for six months of the last twelve, I think I'll come out ahead for the year no matter what.

Dude, you are truly living large. :-)

Ladybug: We're all paying for the hours a trucker spends idle (and we all know that he or she doesn't). But at the risk of bringing a world of irate truckers down upon me head, what's getting hammered here is the independent rig owner - the guy (or gal) that's supposed to pull over after 11 hours, regards of the miles traveled. Completely Clueless Wizards like me might ask why the "pony express" model of switching riders isn't employed more often, even among independent drivers.

But, then, I never really appreciated the whole business beyond what I heard on the country music station.

Posted by: spd rdr at July 8, 2008 08:05 PM

Rising gas prices mean my kids and I spend more time at home....together. And they are playing "Guitar Hero" and "Rock Band" more and more and it's really getting on my nerves. So yeah, rising gas prices are affecting their behavior, and mine. For the worse. I need more ....beer. Doh!

School's out...for summmer. Remember that, Senor Pile Juan.

Posted by: Don Brouhaha at July 8, 2008 09:10 PM

I'm taking it as fact, Don, that your kids don't drive....yet

Posted by: spd rdr at July 8, 2008 09:45 PM

Oh c'mon now Don, I am sure you annoy them with Guitar Hero an Rock Band just as much as they annoy you. I hate it when people sell themselves short. At least in this market. In some situations self short selling can be quite profitable.

Posted by: Pile On at July 8, 2008 09:53 PM

Yes, Hrr Rdr, they don't drive...yet. My 14 year old son covets the '87 BMW that sits in the garage. Scary times ahead.

And yet, they wanted me to sing the lead on "Green Grass and High Tides" the other day because I knew all the words, or they just needed a singer, or something like that...

Posted by: Don Brouhaha at July 8, 2008 10:02 PM

pwned (or something like that).

Posted by: spd rdr at July 8, 2008 10:14 PM

Yes, and annoyingly so! :)

Posted by: Don Brouhaha at July 8, 2008 10:57 PM

One of our pilot friends told us fuel economy was great when you got to level flight.

My Precious gets 18 mpg (documented) on the highway when we go 63 mph. At lower speeds you are lugging a ten cylinder engine.

During the Gas Crisis that led to the 55 mph speed of the 1970s, between Reno NV and Bonneville, UT, no one cared about catching speeders. If you went too slow you died of boredom. If you went the right speed, the journey was pleasant.

Although...one summer when gas was .58 cents a gallon, we drove that nasty route with the windows down and no AC. In August.

There is a reason I live far away from family...

heh.

Posted by: Cricket at July 9, 2008 01:19 AM

I gave up counting when more than 100 cars passed me without me passing anybody. At 66 miles per hour.

TigerHawk's lucky he wasn't rear-ended by a tandem semi doing 85. Driving on Jersey roads is the beginner's course for driving on the autobahn...

Posted by: BillT at July 9, 2008 07:08 AM

Well, since I spent no money on beer for six months of the last twelve, I think I'll come out ahead for the year no matter what.

I haven't had to pay for one single beer since I've been here. However, if there *was* actual beer available, it'd be a different story...

Posted by: BillT at July 9, 2008 07:15 AM

How did we get from the price of gas to the price of beer?

Men :)

One. track. minds.

[shaking head]

Posted by: Cassandra at July 9, 2008 11:48 AM

How did we get from the price of gas to the price of beer?

Commonality.

There's no gas on base and no beer, either.

Next question, please.

Posted by: BillT at July 9, 2008 12:19 PM

"One. track. minds."
Dad always told me that the option list for the number of tracks per male mind was was a very short list. IOW, it's not as if we can help it ya know.

Ohhh lookee there! Something shiny this way comes...=8^}

Posted by: bthun at July 9, 2008 12:25 PM

To be fair Cass, we've got at least two tracks, because you know that beer is NOT all men think about.

Posted by: MikeD at July 9, 2008 04:28 PM

Hmph. You haven't heard the last of this beer thing. :)

Posted by: Grim at July 9, 2008 05:55 PM

"I'm a huge driver"


I knew you weighed over 300 lbs but thanks for the confirmation anyway. ROFL

Posted by: raoul at July 10, 2008 08:23 AM

Is that the best you can do, Raoul?

Closer to 1/3 of that :p
Lame. Really lame.

Posted by: Cassandra at July 10, 2008 08:37 AM

We seem to have a new troll. Oh joy.

Posted by: MikeD at July 10, 2008 09:40 AM

If his idea of a devastating insult is that I'm fat, I think I can live with him, Mike :p

I'm waiting for the next one: "Ooooh. You're *ugly*. And your Momma dresses you funny."

Whatever. Though arguably if I put my picture back up, that one might be hard to refute, except that at my age I hardly expect people to grow weak-kneed at the sight of me :p

Posted by: Cassandra at July 10, 2008 09:49 AM

Hey, *I* didn't think you were dressed funny.

*wobbling off all weak-kneed 'n' stuff*

Posted by: BillT at July 10, 2008 10:41 AM

:)

Posted by: Cassandra at July 10, 2008 10:57 AM

A drive-by full of sound and fury, signifying nothing eh? Well did anyone get the license plate on that maroon 57 Chrysler?

If the maroon drop-top happens to pass again, someone might want to point out a little tidbit that his daddy or at least his momma should have shared. And the tidbit that is intuitively obvious to most casual observers is... Those attributes that comprise beauty in a person, are not isolated to the sack containing the protoplasm.

Or to put a finer point on it, physical beauty, which may be subject to The Perceiver's value system, may only be skin deep, but ugly, and kissing cousin fugly, go all the way to the bone. Raoul is, without doubt, a real purty specimen, to the bone...

Posted by: bthun at July 10, 2008 11:34 AM

Bill, if she tells you that her thighs have their own zip codes, would you please get the cluebat and hit her with it?

PLEASE?????

Posted by: Carrie at July 10, 2008 11:44 AM

I think that Raoul may be a child who has not yet tumbled to the notion that the acceptance of snark requires some depth of prior acquaintance or at least a symbol of good will. :)

Posted by: socialism_is_error at July 10, 2008 11:55 AM

By the way, Milady, I'm curious. Do you use voice translation for your compositions?

Posted by: socialism_is_error at July 10, 2008 12:02 PM

....would you please get the cluebat and hit her with it?

Nope.

In fact, she could tell me I'd look good in a red mini and I still wouldn't do it.

Posted by: BillT at July 10, 2008 12:14 PM

As in voice translation s/ware?

Gosh no. That's why I have so many typos.

I am farsighted, and I have lousy reading glasses that I keep misplacing while I'm typing.

Also, I rarely proof my posts.

I am always in a hurry in the morning. I just sit down and type like a madwoman into this tiny window (anyone who uses Movable Type can attest to the fact that it's impossible to see what the (**^ you're doing if you're over the age of 12).

And then I hit Post, often without bothering to check the entire danged thing to make sure it makes sense, because I get pre-work phone calls from clients and am interrupted about 20 million times while I'm writing. It is a wonder that I ever manage to finish a post at all.

And now you know why nothing I write makes any sense :p

Posted by: Cassandra at July 10, 2008 12:20 PM

Bill, if she tells you that her thighs have their own zip codes, would you please get the cluebat and hit her with it?

Well, they do, you know.

One of them tried to secede from the Union but it was dragged back kicking and screaming by Howard Dean. Seems it had more electoral votes than Tejas.

Posted by: Cassandra at July 10, 2008 12:22 PM

Methinks Raoul should consider putting an "H" where the "J" is in his blog name, so as to keep anyone else from confusing his site with one belonging to someone who actually believes and follows the teachings of Jesus, the son of God.

Posted by: DL Sly at July 10, 2008 12:31 PM

I've started biking a great deal more. Gas prices are a great excuse to get in shape...

Posted by: E.D. Kain at July 10, 2008 01:12 PM

"And now you know why nothing I write makes any sense :p"

Fishing for compliments, are we? :)

Given the new data, I'd rate you a world-class typist. Actually, it was the volume of original output combined with the observation of a very few typically homophonous errata that suggested voice-translation. I have previously remarked on your cultivated use of English and your wide-ranging investigation and commentary keeps me returning.

Will that do? :)

Posted by: socialism_is_error at July 10, 2008 01:16 PM

"In fact, she could tell me I'd look good in a red mini and I still wouldn't do it."

I've heard that about you.

Posted by: Carrie at July 10, 2008 01:50 PM

Honestly, I wasn't :)

I am very embarrassed about my many typos and spelling errors (and as Camo has pointed out, sometimes grammer ones too!) lately. My Dad used to give me hell about them. I am borderline obsessive about that sort of thing - it took me 3 years of blogging to just let go and accept that either I live with crappy posts and imperfect writing, or I don't write at all. I've found that when you write a lot and write quickly, you just don't always notice - especially if you make inline edits. You insert errors as you edit and often don't catch them.

It still bugs me, though. Sometimes I read old posts and I literally cringe! I used to use spellcheck, but it slows me down too much.

Posted by: Cassandra at July 10, 2008 01:53 PM

As to the homophones, my guess is that I was trying to be snarky. Sometimes I intentionally use the wrong word, or possibly I was just really tired.

Posted by: Cassandra at July 10, 2008 01:56 PM

Hey, I thought that was covered under DADT!

Posted by: bthun at July 10, 2008 02:37 PM

Now I feel ashamed; I seem to have landed on a tender spot and I didn't mean to.

I tried to indicate that such errata are, from my point-of-view, quite infrequent. If you are, as you claim, borderline obsessive, I can claim to be an archetype; thus, I could never hope to match your volume combined with your accuracy. I was only interested in whether or not my inference about the use of software was sound.

I believe I've seen you refer to your work as being IT-related, as is mine. If so, you know about the concept of Mean Time Between Failures. That expresses my attitude about such things; pedantic fussing about spelling and grammar gets in the way of the value of the main effort.

My apologies if I hurt you.

Posted by: socialism_is_error at July 10, 2008 02:58 PM

Not at all :)

I have a sense of humor (and humility) about such things. I need that to keep my ego in check :D And I am flattered beyond reason that you all show up here as often as you do.

I am blessed. Typos and all :p

Posted by: Cassandra at July 10, 2008 03:03 PM

"And I am flattered beyond reason that you all show up here as often as you do."

*Sark* and all, eh?
heh

Carrie stole my pointy hat, btw.....said something about using it as a *dart* in the sling shot she and Bill were making with his red mini and then just took off giggling like a mad woman.
Where is Mistress Mandy and her whip when you need her?
*sigh*

0>;~}

Posted by: DL Sly at July 10, 2008 03:25 PM

"In fact, she could tell me I'd look good in a red mini and I still wouldn't do it."

I've heard that about you.

What -- that I've got great legs or that I wouldn't whap Cassie with the cluebat?

Both true.

Posted by: BillT at July 10, 2008 04:19 PM

"What -- that I've got great legs or that I wouldn't whap Cassie with the cluebat?"

The latter. I wouldn't know about the former, so I'll gladly leave that to those who have been forced (why does A Clockwork Orange come to mind?) to obtain that knowledge first hand...so to speak.

0>;~}

Posted by: DL Sly at July 10, 2008 04:33 PM

Sheeshhh... Out, OUT da*&ed spot! Well, back to the mulch pile for me.

Posted by: bthun at July 10, 2008 04:38 PM

I am glad you wouldn't whap me with the cluebat.

I got all gussied up to cheer myself up today but I have no place to go. Being whapped with a clue bat would just add insult to injury :p

Posted by: Casserole at July 10, 2008 04:41 PM

I got all gussied up to cheer myself up today but I have no place to go.

Comment parties don't count?

Posted by: BillT at July 10, 2008 05:21 PM

I'll gladly leave that to those who have been forced ... to obtain that knowledge first hand.

Well, I blush to admit they didn't have to use all that much force...

Posted by: BillT at July 10, 2008 05:24 PM

"Well, I blush to admit they didn't have to use all that much force..."

Ah,......they had ones and fives.

Gotcha.

0>;~}

Posted by: DL Sly at July 10, 2008 05:34 PM

Gotcha.

But it doesn't count if I don't have the slightest idea what "ones and fives" refers to...

Posted by: BillT at July 11, 2008 03:51 PM

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