Policies designed to reduce the damage to the environment caused by transport should be judged by the criterion of the public interest (i.e. a net increase in welfare). Actual decisions (e.g. on speed limits) are taken on wrong grounds. Economics should give more attention to finding ways of reducing risks of harmful decisions.
The author analyses the fuel efficiency of private cars in relation to both technical characteristics and the socio-economic characteristics of the drivers for a sample of Dutch drivers. The age and profession of the driver, and fuel prices, have more significant effects than the gender and income of the driver, or the annual or commuting mileage.
A model is developed which identifies and separates the effects of several responses by the household to a change in gasoline prices. It also estimates the manufacturers’ response of improving the technology of new cars. The results point to improving fuel efficiency as an effective means of energy conservation.
