Economic History of Gas Prices

Here's some much needed context:

But in constant 2010 dollars, that 1919 price of gas was $3.14. True, at the moment we’re paying a bit more—about $3.96. However, keep in mind that in 1919 there were 7.58 million motor vehicles on America’s roads. Today, Americans own about 254 million vehicles. That means that gas prices have risen 26 percent since 1919, while US vehicle ownership has risen 3,250 percent. And those vehicles are being driven more intensively than their 1919 counterparts. We now drive 6,800 percent more miles per year than in 1919, while gas prices have stayed pretty much stable.

Regret, Frustration, and Traffic

The Freakonomics blog recently posted a study done showing that people will give up something to prevent the possibility of regret. In the experiment participants were asked to pick a lottery ticket at random and then were offered a bonus to exchange the ticket for a different one. Because the first choice was random, there's no reason not to accept the free gift, but most do not. This is an irrationality I see often. I think it comes from a misunderstanding of sunk costs. There are certain things that are out of our control, for example the lottery, so they shouldn't effect our decision making.

I use this idea regularly on my long commute to work. It's well known that commuting, along with being  a terrible use of time, is very mentally taxing. One of the more frustrating parts of driving to work in the morning with a late bell looming over your shoulder, is getting behind a slow moving vehicle. That is, until I realized that most of my drive is a sunk cost. There is very little I can do on a road with one lane and very few places to pass. So when I drive, I don't try to go as fast as possible without getting a ticket, I try to limit the space between me and the car in front of me. As long as I'm right behind them, there's nothing else I can do. No regrets, no frustrations.

Cities Are Greener

From the most recent Freakonomics podcast:

if you love nature, stay away from it. We're much more likely to harm nature, as Thoreau did surrounded by the woods than if we lived in tall urban apartments by ourselves. There's a statistical partner to that, which is together with Matthew Kahn, I've assembled data on carbon emissions associated with living in different parts of the country. And there are two facts which I think are important to come out of that: one of which is that people who live in cities do tend to emit significantly less carbon than people who live in countries. And this is controlling for income controlling for family size. That's coming mainly from driving, from the fact there's just a lot fewer carbon emissions associated with dense living. It's not just the move to public transportation, it's also that for drivers within cities, they're just driving much shorter distances. And then of course, it's because of smaller homes. The higher price of urban space means that people are living in smaller homes even with the same family size. And that leads to lower electricity usage, lower home heating usage, and those are the facts that make cities seem, at least to my eyes, significantly greener.

So if, as the author also claims, that cities are the engines of economic and social growth without the environmental destruction, why don't we all live in big cities? The government:

I think that at the federal level there are three issues, one of which is the home mortgage interest deduction. The home mortgage interest deduction essentially acts as a push away from urban apartments into suburban homes. [...]

Second policy that's problematic, and we're still doing this, and this I actually give President Obama much less credit for—we've been huge on building infrastructure in this country for a long time. [...]

But I worry about a renewed push towards building new transportation infrastructure in this country. The work of Nathaniel Baum-Snow finds that every new highway that cut into a major city in the post war period reduced that city's population by eighteen percent because of suburbanization. Transportation is sort of the opposite of urban clustering. You're sort of subsidizing people to spread out.

And the third thing, which is not really a federal issue, but it's huge is our local system of schooling. Certainly for anyone who's a parent like myself, the suburban school districts offer huge enticement to leave cities.

If you're not subscribed to this podcast yet, I highly reccomend it (and others).

Worthwhile Sentences on Waste

From The Independent: "air conditioning guzzles 15 per cent of total American energy consumption"

From Stephen Dubner: "If you don’t miss a plane now and then you’re spending too much time in airports."

From Twitter: "i've found smartphones increase the opportunity cost of driving, tilt toward public trans."

From The Economist: "The list of innovations achieved by the pharaohs is as thin as the list of innovations achieved by British Rail or the US Postal Service.”

From historian Louis Menand: “War is specially terrible not because it destroys human beings, who can be destroyed in plenty of other ways, but because it turns human beings into destroyers."

From previous worthwhile sentences.

Emptying the Bottle: Late-June '10 Links

Here is a list of the worthwhile sites I've Bookmarked recently:

• Honest discussion about resilience in a woman's divorce.
• Most terrorists aren't evil geniuses, they are dumb perverts.
• From me: Unlikely Twitter Connection from the Mister Diplomat blog.
• Deficit spending to improve the economy makes citizens feel less secure. 
• BP spills coffee [video].
• In Russia,  audiences give wrong answers intentionally for the ''Ask the Audience'.
• A tax on gas reduces drunk driving (earlier and earlier).
• Trade, The Great Prosperity Machine [video].
• Abolish the Department of Education.
• Fathers are less important to child rearing than previously believed.

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Economics of Vehicle Safety

With all the news of Toyota's safety concerns, Washington has decided to step in, even to the point of demanding the president of the company appear before Congress. Not surprisingly the meeting looked less like concern for public safety and more like a political circus. The Chicago Tribune recently published a great article on how the federal government's response ignores customer response:

Then there was the reaction from customers, the very people whose lives and safety are at stake every time they get in a car. In the first four months of this year, Toyota's U.S. sales did not fall, as you might expect. They rose by 12 percent.

and previous private sector success:

"automakers have developed many of today's significant safety innovations without a government mandate, including anti-lock brakes, electronic stability control, adaptive headlights, side airbags and curtains, front passenger safety belt reminder systems and advanced collision avoidance features like lane departure warning, blind spot monitors and adaptive cruise control."

Those improvements are among the reasons that last year, the number of traffic deaths was the lowest since 1954 — even though there are twice as many drivers, traveling four times as many miles, as there were back then.

and possible public sector failure:

What they are inclined to forget is that mandatory vehicle improvements don't come free. Those black boxes, for example, could cost hundreds or thousands of dollars apiece.

New cars have more safety features than older ones, so someone who trades in an old vehicle is likely to increase her life expectancy. Regulations that raise the price of a new car shut some buyers out of the market. So tougher federal rules may have the perverse effect of leading to more traffic fatalities.

If so, don't expect Congress to hold a hearing.

Cost of Commuting

In a world with many choices, I admit sometimes we don't make the right ones. What I have a harder time understanding is repeated bad decisions. However I am not exempt from these seemingly irrational choices. I mentioned before how much I drive, but Jonah Lehrer suggests I don't:

According to the calculations of Frey and Stutzer, a person with a one-hour commute has to earn 40 percent more money to be as satisfied with life as someone who walks to the office.

Why is it so bad?

One reason is that it's a painful ritual we never get used to - the flow of traffic is inherently unpredictable. As a result, we don't habituate to the suffering of rush hour. (Ironically, if traffic was always bad, and not just usually bad, it would be easier to deal with. So the commutes that really kill us are those rare days when the highways are clear.) As the Harvard psychologist Daniel Gilbert notes, "Driving in traffic is a different kind of hell every day."

So why do 3.5 million Americans drive over three hours to and from work?

Consider two housing options: a three bedroom apartment that is located in the middle of a city, with a ten minute commute time, or a five bedroom McMansion on the urban outskirts, with a forty-five minute commute. "People will think about this trade-off for a long time," Dijksterhuis says. "And most them will eventually choose the large house. After all, a third bathroom or extra bedroom is very important for when grandma and grandpa come over for Christmas, whereas driving two hours each day is really not that bad." What's interesting, Dijksterhuis says, is that the more time people spend deliberating, the more important that extra space becomes. They'll imagine all sorts of scenarios (a big birthday party, Thanksgiving dinner, another child) that will turn the suburban house into an absolute necessity. The pain of a lengthy commute, meanwhile, will seem less and less significant, at least when compared to the allure of an extra bathroom. But, as Dijksterhuis points out, that reasoning process is exactly backwards: "The additional bathroom is a completely superfluous asset for at least 362 or 363 days each year, whereas a long commute does become a burden after a while."

I've been thinking about my commute for a long time. I'm right in the middle of my church, work, and improv theater, so for now it's definitely worth it. At least I have the benefits of renting and the flexibility to move in the cost minimizing direction.