Demand for gasoline is more price-inelastic than commonly thought

eScholarship provides open access, scholarly publishing services to the University of California and delivers a dynamic research platform to scholars worldwide. Abstract: One of the most frequently examined statistical relationships in energy economics has been the price elasticity of gasoline demand. We conduct a quantitative survey of the estimates of elasticity reported for various countries around the world. Our meta-analysis indicates that the literature suffers from publication selection bias: insignificant or positive estimates of the price elasticity are rarely reported, although implausibly large negative estimates are reported regularly. In consequence, the aver- age published estimates of both short- and long-run elasticities are exaggerated twofold. Using mixed effects multilevel meta-regression, we show that after correction for publication bias the average long-run elasticity reaches -0:31 and the average short-run elasticity only -0:09. Abstract One of the most frequently examined statistical relationships in energy economics has been the price elasticity of gasoline demand. We conduct a quantitative survey of the estimates of elasticity reported for various countries around the world. Our meta-analysis indicates that the literature suffers from publication selection bias: insignificant or positive estimates of the price elasticity are rarely reported, although implausibly large negative estimates are reported regularly. In consequence, the average published estimates of both short- and long-run elasticities are exaggerated twofold. Using mixed-effects multilevel meta-regression, we show that after correction for publication bias the average long-run elasticity reaches − 0 . 31 and the average short-run elasticity only − 0 . 09.

[1]  Leon Bax,et al.  Beyond publication bias. , 2011, Journal of clinical epidemiology.

[2]  Youngduk Kim,et al.  The empirical effects of a gasoline tax on CO2 emissions reductions from transportation sector in Korea , 2011 .

[3]  Eva Horváthová,et al.  Does environmental performance affect financial performance? A meta-analysis , 2010 .

[4]  Daniel J. Graham,et al.  An Analysis of Gasoline Demand Elasticities at National and Local Levels in Mexico , 2010 .

[5]  T. Havránek,et al.  Which Foreigners are Worth Wooing? A Meta-Analysis of Vertical Spillovers from FDI , 2010 .

[6]  D. Zerom,et al.  A Semiparametric Analysis of Gasoline Demand in the United States Reexamining The Impact of Price , 2010 .

[7]  T. Stanley,et al.  Picture this: A Simple Graph that Reveals Much Ado About Research , 2010 .

[8]  Z. Wadud,et al.  A cointegration analysis of gasoline demand in the United States , 2009 .

[9]  Santiago G. Moreno,et al.  Novel methods to deal with publication biases: secondary analysis of antidepressant trials in the FDA trial registry database and related journal publications , 2009, BMJ : British Medical Journal.

[10]  T. Havránek.  Rose effect and the euro: is the magic gone? , 2009 .

[11]  T. Stanley,et al.  Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis , 2009 .

[12]  Oludele Akinloye Akinboade,et al.  The demand for gasoline in South Africa: An empirical analysis using co-integration techniques , 2008 .

[13]  T. Stanley,et al.  Theory competition and selectivity: are all economic facts greatly exaggerated? , 2008 .

[14]  Peter Nijkamp,et al.  A meta-analysis of the price elasticity of gasoline demand. A SUR approach , 2008 .

[15]  Peter E. Kennedy,et al.  The Use (and Abuse) of Meta-Analysis in Environmental and Natural Resource Economics: An Assessment , 2008 .

[16]  Stephen B. Jarrell,et al.  Meta-Regression Analysis as the Socio-Economics of Economic Research , 2008 .

[17]  Tommy Stanley,et al.  Meta-Regression Methods for Detecting and Estimating Empirical Effects in the Presence of Publication Selection , 2007 .

[18]  Sarah E. West,et al.  Optimal taxation and cross-price effects on labor supply: Estimates of the optimal gas tax , 2007 .

[19]  Rodrigo Bueno,et al.  Short-run, long-run and cross elasticities of gasoline demand in Brazil , 2003 .

[20]  C. Nicol,et al.  Elasticities of demand for gasoline in Canada and the United States , 2003 .

[21]  R. Mendelsohn,et al.  The effectiveness of gasoline taxation to manage air pollution , 2001 .

[22]  Alex J. Sutton,et al.  Methods for Meta-Analysis in Medical Research , 2000 .

[23]  Ramakrishnan Ramanathan,et al.  Short- and long-run elasticities of gasoline demand in India: An empirical analysis using cointegration techniques , 1999 .

[24]  M. Espey.  Gasoline demand revisited: an international meta-analysis of elasticities , 1998 .

[25]  G. Rausser,et al.  Food import demand in the Czech Republic , 1998 .

[26]  Badi H. Baltagi,et al.  Pooled estimators vs. their heterogeneous counterparts in the context of dynamic demand for gasoline , 1997 .

[27]  R. Goldfarb.  The economist-as-audience needs a methodology of plausible inference , 1995 .

[28]  M. N. Eltony,et al.  Demand for gasoline in Kuwait: An empirical analysis using cointegration techniques , 1995 .

[29]  J. Bentzen.  An empirical analysis of gasoline demand in Denmark using cointegration techniques , 1994 .

[30]  M. N. Eltony.  Transport Gasoline Demand In Canada , 1993 .

[31]  Kevin Lang,et al.  Are all Economic Hypotheses False? , 1992, Journal of Political Economy.

[32]  Franz Wirl,et al.  Energy demand and consumer price expectations: An empirical investigation of the consequences from the recent oil price collapse , 1991 .

[33]  T. Sterner.  Gasoline demand in the OECD: choice of model and data set in pooled estimations , 1991 .

[34]  Stephen B. Jarrell,et al.  Meta-Regression Analysis: A Quantitative Method of Literature Surveys , 1989 .

[35]  E. Berndt,et al.  Energy demand in the transportation sector of Mexico , 1985 .

[36]  Noel D. Uri,et al.  Testing for stability: Motor gasoline demand and distillate fuel oil demand , 1985 .

[37]  Badi H. Baltagi,et al.  Gasoline demand in the OECD: An application of pooling and testing procedures , 1983 .

[38]  N. Gallini.  Demand for Gasoline in Canada , 1983 .

[39]  Korhan Berzeg,et al.  DEMAND FOR MOTOR GASOLINE : A GENERALIZED ERROR COMPONENTS MODEL , 1982 .

[40]  C. Dahl,et al.  Do Gasoline Demand Elasticities Vary , 1982 .

[41]  Robert B. Archibald,et al.  An Analysis of the Short-Run Consumer Demand for Gasoline Using Household Survey Data: A Reply , 1980 .

[42]  M. Kwast.  Note on the structural stability of gasoline demand and the welfare economics of gasoline taxation , 1980 .

[43]  A. Reza,et al.  THE DEMAND FOR PASSENGER CAR TRANSPORT SERVICES AND FOR GASOLINE , 1979 .

[44]  C. Dahl,et al.  Consumer adjustment to a gasoline tax , 1979 .

[45]  R. Rosenthal.  The file drawer problem and tolerance for null results , 1979 .

[46]  C. Dahl.  American energy consumption -- Extravagant or economical? : A study of gasoline demand , 1978 .

[47]  J. Kraft,et al.  REGIONAL DEMAND FOR GASOLINE: A TEMPORAL CROSS‐SECTION SPECIFICATION* , 1978 .

[48]  P. Swamy,et al.  Estimation of a dynamic demand function for gasoline with different schemes of parameter variation , 1978 .

[49]  R. Rasche,et al.  An Analysis of the Private and Commercial Demand for Gasoline , 1975 .

[50]  Philip K. Verleger,et al.  Dynamic Demand Analyses for Gasoline and Residential Electricity , 1974 .

[51]  Markus Pock,et al.  Gasoline demand in Europe: New insights , 2010 .

[52]  Akin Iwayemi,et al.  Estimating petroleum products demand elasticities in Nigeria: A multivariate cointegration approach , 2010 .

[53]  Tommy Stanley,et al.  Identifying and Correcting Publication Selection Bias in the Efficiency-Wage Literature: Heckman Meta-Regression , 2007 .

[54]  R. Florax,et al.  A Meta-Analysis of Beta- Convergence , 2005 .

[55]  Karl Storchmann,et al.  Long-Run Gasoline demand for passenger cars: the role of income distribution , 2005 .

[56]  David Neumark,et al.  Wheat from Chaff: Meta-Analysis as Quantitative Literature Review: Reply , 2002 .

[57]  David Card,et al.  Time-Series Minimum-Wage Studies: A Meta-analysis , 1995 .

[58]  Gouda Abdel-Khalek.  Income and price elasticities of energy consumption in Egypt: A time-series analysis , 1988 .

[59]  S. A. Monroe,et al.  State gasoline consumption in the USA: An econometric analysis , 1985 .

[60]  Leonidas P. Drollas,et al.  The demand for gasoline: Further evidence , 1984 .

[61]  A. Tishler.  The demand for cars and gasoline: A simultaneous approach , 1983 .

[62]  W. Wheaton,et al.  The Long-Run Structure of Transportation and Gasoline Demand , 1982 .

[63]  Robert B. Archibald,et al.  The distributional impact of alternative gasoline conservation policies , 1981 .

[64]  Michael Kennedy,et al.  An Economic Model of the World Oil Market , 1974 .