What drives support for self-driving car technology in the United States?

Abstract

Recent advances in automotive technology have made fully automated self-driving cars technologically feasible. Despite offering many benefits such as increased safety, improved fuel efficiency, and greater disability access, public support for self-driving cars remains low. While previous studies find that demographic factors such as age and sex influence self-driving car support, limited research has examined variables that are well known to predict public attitudes toward emerging technology. Using self-report data from a quota sample of American adults (N?=?1008), we find that age and sex are not significantly associated with support for self-driving car policies when controlling for these other variables. Instead, significant predictors of support included trust in automotive institutions and regulatory bodies, recognition of self-driving car benefits, positive affect toward self-driving cars, and a greater perception that human-driven cars are riskier than self-driving cars. Importantly, we also find that individualism is negatively associated with support. That is, people who value personal autonomy and limited government regulation may perceive policies encouraging self-driving car use as threatening to their worldviews. Altogether, our results suggest strategies for encouraging greater public support of self-driving vehicles while also forecasting potential barriers as this technology emerges as a fixture in transportation policy.     

Externalities From Driving Luxury Cars

Driving luxury cars creates negative externalities. Driving a luxury car increases property damage liability insurance costs for all drivers due to the striking differences in repair costs of luxury cars and nonluxury cars in Korea. In this study, we estimate the externalities related to auto accidents involving luxury cars by running a two‐part model using unbalanced individual‐level panel data on insurance claims and characteristics of the insured party. We find evidence of negative externalities in all of our results. To be specific, a 1 percent increase in luxury cars raises the property damage liability costs by 1.9–2.6 percent per claim. The estimated nationwide increase in the cost of liability due to driving of luxury cars in Korea is USD 139–196 million per year. This cost is shared by all drivers nationwide.     

Intermediaries and product quality in used car markets

We present empirical evidence supporting that used cars sold by dealers have higher quality: (i) dealer transaction prices are higher than unmediated market prices, and this dealer premium increases in the age of the car as a ratio and is hump-shaped in dollar value, and (ii) used cars purchased from dealers are less likely to be resold. In a model, we show that these empirical facts can be rationalized either when dealers alleviate information asymmetry, or when dealers facilitate assortative matching. The model predictions allow us to distinguish these two theories in the data, and we find evidence for both.     

The incidence of Cash for Clunkers: Evidence from the 2009 car scrappage scheme in Germany

This paper investigates the German car scrappage program, focusing on the incidence of the premium. We ask how much of the €2500 ($3500) buyer subsidy is actually captured by the demand side. More precisely, we analyze the program’s impact on different car segments, allowing for heterogeneity in incidence at different points in the vehicle price distribution. Using a unique microtransaction data set, we find that the incidence of the subsidy strongly and significantly varies across price segments. Subsidized buyers of cheap cars paid a little more than comparable buyers who did not receive the subsidy, indicating incidence amounts slightly below 100 %. For more expensive vehicles, subsidized buyers were granted large extra discounts on top of the government premium, translating into incidence amounts considerably greater than 100 %. Taken together, this results in an aggregate incidence amount of up to plus €350 million, suggesting that the positive effect for expensive cars overcompensates the negative effect for small cars.     

The long-life car

Today, cars last about ten years. This lifespan could be extended to an optimum of 18–25 years. The critical component is the body shell, and more research is needed before all-aluminium bodies could be mass produced. Such a car would consume less material resources in the long run (300 000km), although it would cost about 30% more than the conventional car. Over a decade or so its production would decrease employment in the car industry by about 4%, while increasing employment in the short term.     

Distributional Implications of Environmental Taxation in Denmark

Environmental taxes have been introduced in many countries. However, few countries have reached the level of environmental taxation that is seen in Denmark today. This paper analyses the individual taxes as well as the combination of all these taxes and duties related to environmental concerns, including taxes on heating, transport fuels, electricity, water, waste, plastic bags, registration of cars, annual car use and pesticides. The distributional effect of taxes is examined in relation to household income, socio‐economic class, residential location and family status. The shifting of the tax structure from high marginal income tax to consumption‐based taxes, especially environmental taxes, might have distributional impacts that have not been considered part of the tax policy. The results suggest that in Denmark taxes on petrol and registration duties for cars are progressive, whereas most other environmental taxes are regressive, especially the green taxes on water, retail containers and CO2 emissions.     

How Much Are Car Purchases Driven by Home Equity Withdrawal?

Previous research indicates that changes in housing wealth affect consumer spending on cars. We find that home equity extraction plays only a small role in this relationship. Consumers rarely use funds from equity extraction to purchase a car directly, even during the mid‐2000s’ housing boom; this finding holds across three nationally representative household surveys. We find in credit bureau data that equity extraction does lead to a statistically significant increase in auto loan originations, consistent with equity extraction easing borrowing constraints in the auto loan market. This channel, though, accounts for only a tiny share of overall car purchases.     

Credit default swaps and the UK 2008–09 short sales ban

Most studies of the short sales ban of UK financial stocks from September 2008 to January 2009 fail to control for the UK’s worst ever banking crisis and the underlying increase in risk. This paper studies the ban’s impact on the 13 large financials with credit default swaps (CDS) and 20 smaller stocks without CDS. The results reveal that returns of banned stocks Granger cause CDS returns in the pre- and post-ban periods, but causality runs from CDS to stock returns during the ban period. Underlying risk proxied by the CDS probability of default increased during the ban and the immediate pre- and post-ban periods which highlights an endogeneity problem ignored in some studies. This increased risk provides a plausible rationale for why CDS and related equity bid-ask spreads - which increased during the ban period – failed to fall significantly in the post-ban period. Panel regression results indicate that probability of default was an important economic determinant of stock bid-ask spreads during the ban period. Finally, our results suggest that the ban offered direct price support for the smaller non-CDS stocks during the ban period and indirect support for CDS stocks from their pre-ban to their post-ban levels.     

Comparative optimism and risky road traffic behaviors among high‐risk sports practitioners

This study examines the relationship between participation in risky sports, comparative optimism (CO), and risky road traffic behaviors among a sample of adult men. We surveyed high‐risk (n = 313) and low‐risk (n = 53) sports practitioners, and non‐sportsmen (n = 89), assessing their CO, as well as their self‐reported risky behaviors and their accident experiences while driving a car. Results show that high‐risk sports practitioners expressed CO regarding the quality of their reflexes while driving and their vulnerability to traffic accidents. High‐risk sportsmen reported more risky behaviors while driving a car than the members of the other groups, and some of them, namely BASE‐jumpers, have experienced more traffic accidents. High‐risk sportsmen’s risky behaviors and accident experiences did not prevent them from expressing CO regarding their vulnerability to road accidents. Results are discussed, as well as putative psychological mechanisms underlying high‐risk sport practitioners’ CO and risky behaviors while driving.     

The Capitalization of Consumer Financing into Durable Goods Prices

Using loan‐level data on millions of used‐car transactions across hundreds of lenders, we study the consumer response to exogenous variation in credit terms. Borrowers offered shorter maturity decrease expenditures enough to offset 60% to 90% of the monthly payment increase. Most of this is driven by shifting toward lower‐quality cars, but affected borrowers offset 20% to 30% of a monthly payment shock by negotiating lower prices for equivalent cars. Our results suggest that durable goods prices adjust to reflect credit terms even at the individual level, with one year of additional loan maturity increasing a car's price by 2.8%.     

Frailty modelling of time-to-lapse of single policies for customers holding multiple car contracts

Corporate customers often hold multiple contracts and this might give dependence between the lapsing times of the single policies. We present a shared gamma frailty model in order to study the time-to-lapse of single car policies for customers holding multiple car contracts with the same insurance company, accounting for measured and time-dependent covariates. Customers with the highest frailty value tend to leave the company earlier than the others and finding these is a central aspect within a company’s customer relationship management strategy. We estimate conditional survival curves which illustrate the decreased survival probability of a customer after a lapse in a single car insurance policy. The individual survival curves are overestimated if the underlying association for cars with the same customer is ignored. Fitting misspecified Cox’s proportional hazards model also results in an underestimation of the standard error of the parameter estimates.     

Claims frequency modeling using telematics car driving data

We investigate the predictive power of covariates extracted from telematics car driving data using the speed-acceleration heatmaps of Gao, G. & Wüthrich, M. V. [(2017). Feature extraction from telematics car driving heatmaps. SSRN ID: 3070069]. These telematics covariates include K-means classification, principal components, and bottleneck activations from a bottleneck neural network. In the conducted case study it turns out that the first principal component and the bottleneck activations give a better out-of-sample prediction for claims frequencies than other traditional pricing factors such as driver's age. Based on these numerical examples we recommend the use of these telematics covariates for car insurance pricing.     

Effiziente Risikosteuerung durch die Kfz-Versicherung – Eine verhaltensökonomische Untersuchung

From an economic perspective, the automobile insurance plays an important role in regulating the activity level of driving by closing a prevention gap of the strict liability for automobile accidents. The gap is caused by bounded rationality of car owners and drivers. Unrealistic optimism and self-serving bias lead to an underestimation of expected damages. As a result, the activity level of driving would rise above the optimum, social costs would exceed the utility from driving and too many accidents would occur. The article illustrates how the automobile insurance counteracts these inefficiencies and thereby leads to a more efficient activity level.     

Banning short sales and market quality: The UK’s experience

We study the effects that the ban on short sales of shares in financial firms introduced in late 2008 and removed early 2009 had on the microstructure and the quality of UK equity markets. We show that the ban did nothing to affect order flows: financial stocks were being more aggressively sold off than their peers pre-ban and this situation persisted through the ban period. Trading volume in financials was massively reduced, however. The ban decimated order book liquidity for financials. The deterioration was symmetric, affecting the limit buy and limit sell side of the order book equally. Finally we show that, through the period of the ban, markets for financial stocks were substantially less efficient and that the role of the trading process in aiding price discovery was greatly reduced. The effects identified above were largely reversed once the ban was lifted. The persistence of the deterioration in market quality and liquidity though the relatively long-lasting UK ban on short selling suggests that other major market developments such as the TARP program were not responsible since these were concentrated in the early half of the ban. We thus argue that the short selling ban was responsible for detrimental effects on the quality of UK equity markets and that, far from being stabilising, the ban exacerbated problems in valuing UK financial stocks.     

The "Cotton Problem"

Cotton is an important cash crop in many developing economies,supporting the livelihoods of millions of poor households. Insome countries it contributes as much as 40 percent of merchandiseexports and more than 5 percent of GDP. The global cotton market,however, has been subject to numerous policy interventions,to the detriment of nonsubsidized producers. This examinationof the global cotton market and trade policies reaches fourmain conclusions. First, rich cotton-producing countries shouldstop supporting their cotton sectors; as an interim step, transfersto the cotton sector should be fully decoupled from currentproduction decisions. Second, many cotton-producing (and oftencotton-dependent) developing economies need to complete theirunfinished reform agenda. Third, new technologies, especiallygenetically modified seed varieties, should be embraced by developingeconomies; this would entail extensive research to identifyvarieties appropriate to local growing conditions and the establishmentof the proper legislative and regulatory framework. Finally,cotton promotion is needed to reverse or at least arrest cotton’sdecline as a share of total fiber consumption.      

The 2011 European short sale ban: A cure or a curse?

This paper examines whether the 2011 European short sale ban on financial stocks proved to be successful or had a negative impact on financial markets. We explicitly take an options market perspective and focus on market participants’ changes in beliefs and expectations. During the ban, short positions in banned stocks decreased, whereas they increased for non-banned stocks. Our results indicate that the ban increased implied jump risk levels, thereby negatively impacting the banned financial stocks. However, we also observe that after the announcement of the ban, financial contagion risk actually dropped for banned stocks. Instead of a substitution effect between regular short selling and synthetic shorting through single stock puts, we observe a migration out of single stock puts into the EuroStoxx 50 index options market. We conclude that this type of migration diversified selling pressure initially concentrated in financial stocks across a larger share of the stock market, thereby reducing systemic risks and enhancing overall financial stability.     

On the Consequences of Behavioral Adaptations in the Cost–Benefit Analysis of Road Safety Measures

It is sometimes argued that road safety measures or automobile safety standards fail to save lives because safer highways or safer cars induce more dangerous driving. A similar but less extreme view is that ignoring the behavioral adaptation of drivers would bias the cost–benefit analysis of a traffic safety measure. This article derives cost–benefit rules for automobile safety regulation when drivers may adapt their risk‐taking behavior in response to changes in the quality of the road network. The focus is on the financial externalities induced by accidents because of the insurance system as well as on the consequences of drivers' risk aversion. We establish that road safety measures are Pareto improving if their monetary cost is lower than the difference between their (adjusted for risk aversion) direct welfare gain with unchanged behavior and the induced variation in insured losses due to drivers' behavioral adaptation. The article also shows how this rule can be extended to take other accident external costs into account.     

Aptiv Becoming a More Sustainable Business

The President and CEO of Aptiv presents and then discusses his progress in carrying out his ‘long‐term plan’ to transform an automotive parts supplier that was once part of General Motors into a ‘global technology company.’ The company's mission is to maintain and strengthen its current position as ‘a partner of choice’ of the world's largest automakers in designing and manufacturing ‘the brain and the nervous system of the vehicle’—and in so doing, to make vehicle transportation ‘safer, greener, and more connected.’ With 15 major tech centers and 126 manufacturing sites spread across 44 countries, and with over 160,000 employees, including 18,600 engineers and scientists, the company has the scale and resources to carry out that mission. And attesting to the resilience of its business model, in 2018, a year in which the global number of cars sold actually went down, the company increased its revenue by 10% and its operating cash flow by 50%. In the area of safety, the company is helping its customers build vehicles that move the industry closer to its goal of zero traffic fatalities and accidents by delivering the building blocks of active safety systems—which include perception and vision systems, and the high‐speed and high‐reliability networks that connect them. (And promising even greater gains in safety, the company's advances in fully automated vehicles are helping make self‐driving cars a reality.) In terms of green initiatives, the company is focused on minimizing the vehicles' ‘total lifecycle impact on the environment’ by providing the high‐voltage distribution and connection systems for electric cars, while also using ‘smarter’ vehicle architectures to achieve significant reductions in weight and mass. Finally, the company is helping the industry incorporate the increased connectivity that aims to provide a seamless integration between the passenger, the vehicle, and the Internet of Things. The company's commitment to corporate social responsibility goes well beyond its products and solutions. As an important part of its disciplined approach to creating sustainable long‐term value for its shareholders, the company tracks a range of key performance indicators designed to ensure that ‘we devote the right amount of time and attention to each of our key stakeholders.’ Along with its stakeholder programs and ongoing investment in human capital, which have helped the company win the designation ‘one of the world's most ethical companies’ in seven consecutive years, the CEO also cites the important roles played by its highly collaborative and engaged board of directors, and by a long‐term incentive pay plan for its senior management team that, along with standard financial measures, uses a ‘strategic results modifier’ that reflects the company's success in meeting ‘non‐financial goals that are related to talent, culture, and product quality.’     

A Presumptive Pigovian Tax: Complementing Regulation to Mimic an Emissions Fee

If regulations are used to make cars and fuels cleaner, shouldgasoline taxes be used to manage demand for trips that pollute?Analysis of a well-composed program for Mexico City indicatesthat the emission reductions would cost 24 percent more if atax on gasoline was not introduced. A simple analytical framework is developed to analyze the useof abatement requirements to make cars cleaner, and a gasolinetax to economize on the use of cars. The two instruments shouldbe combined to mimic the incentives that would have been providedby an emissions fee. Thus, cleaner cars and fewer trips areanalogous to competing suppliers of emission reductions; theplanner should buy from both so that marginal costs are equal.Applying that rule, the marginal cost of emission reductionsis, simply, the gasoline tax rate divided by emissions per liter.     

The 2008 short sale ban: Liquidity, dispersion of opinion, and the cross-section of returns of US financial stocks

This study examines the cross-sectional impact of the 2008 short sale ban on the returns of US financial stocks. Motivated by the large cross-sectional variation in the extent to which banned stocks suffer an illiquidity shock, we hypothesize that stocks with larger liquidity declines are associated with poorer contemporaneous stock returns. The evidence supports this hypothesis and suggests that this effect is stronger for more liquid stocks, as predicted by Amihud and Mendelson (1986). Moreover, consistent with Miller’s (1977) model, we report a valuation reversal whereby stocks with higher abnormal returns at the onset of the ban have lower abnormal returns at its removal. Our findings are robust when we control for firms most affected by TARP, include non-banned matched firms, and compare banned firms’ stock returns with their bond returns. From a policy standpoint, the ban reduced valuations, ceteris paribus, of the stocks that were hardest hit by illiquidity.