Agenda Packet 9-11-19 Work Session

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Two analyses Our paper contains two sets of analyses. First, using data from various National Household Transportation Surveys (NHTS), we estimate vehicle ownership rates and annual miles traveled controlling for confounding variables such as income, household size, urbanity and education. We find there is no evidence of a difference in vehicle ownership. In contrast to conventional wisdom, millennials actually drive more miles per year. The most recent NHTS survey took place in 2017, implying the oldest millennial in the data was 37 years old. Of course, a skeptic would respond to this first set of analyses believing them to be wrong because some of those confounding factors are actually life choices, and millennials are choosing to alter those life choices. To account for this, we also estimate to what degree millennials are altering those life choices, and here’s the important part: by how much those alterations affect vehicle ownership. Don’t miss: Here are all the things millennials have been accused of killing — from dinner dates to golf To do this, we use Census data and estimate how millennials are changing their marriage rates, urbanity, number of children and income levels. We then estimate how those changes affect vehicle ownership. While we find that millennials are altering life choices that affect vehicle ownership, the net effect of those endogenous choices is to reduce vehicle ownership by less than 1%. We can statistically rule out effects larger than 2%. Many millennials report they prioritize environmentally friendly products, but our study shows that the so-called “Green Generation” does not exhibit significantly different preferences when it comes to transport. This does not inherently mean millennials do not consider the environment in their car-buying decisions, but for many millennials having a vehicle may not be a choice. So, what’s the upshot? While there are plenty of interesting ramifications to this for the auto industry, perhaps the most important take-away is for policy makers. Let’s be clear: The U.S. cannot rely on millennials’ preferences alone to reduce carbon emissions. They operate under many of the same constraints as previous generations, and they still have strong preferences for personal vehicles. Christopher Knittel is the George P. Shultz Professor of Applied Economics at the MIT Sloan School of Management. September 11, 2019, Work Session – Item 1