MPG Illusion and Vehicle Choice: An Empirical Study of the Japanese Household Survey

Previous studies have shown that people understand the future ancillary cost of durable goods such as an automotive vehicle. However, consumers tend to misunderstand benefits and costs these goods. One most interesting discussions about consumer cognitive ability for energy is miles per gallon (MPG) illusion. In this study, we analyze people’s misunderstanding relationship between kilometers liter (KPL) actual amount fuel saved using vehicle owner survey data. We developed some questions measure how much each person involved with MPG (or KPL) Additionally, our includes capturing preferences affecting costs, time. Controlling important respondent characteristics, income or gender, empirical model analyzes extent KPL selections personal auto vehicles are affected. found many Japanese costs. Our results demonstrate who choose a higher 4.324 km car than those understand. This finding implies illusion affects selection consumers’ cars.