Americans Mostly Just Whining About High Gas Prices - Spending Habits Don't Change Much

Danielle Scott/CC BY-SA 2.0

Some interesting economic research on the impact of higher gas prices on Americans' spending habits coming from New York Times: In short, even when energy prices are high, Americans aren't markedly decreasing spending on recreation or other discretionary expenditures.

Higher gas prices had "no significant effect on the consumption of movies, bowling and billiards, casino gambling, and only insignificant declines for recreational camps, sightseeing, spectator sports and spectator amusements," the article notes.

After comparing how Europeans have responded to comparatively much higher fuel prices (though still below what the full environmental cost, it's worth noting) by taking more public transit (it's available...) and living closer to the center of town (they have center of towns), versus Americans not embracing similar measures, Adam Davidson concludes: "If gas prices truly damage the quality of our lives, we have done a remarkable job of hiding it."

According to NYT, gasoline and motor oil account for 4.4% of the average American's spending, versus 10.4% on restaurants and entertainment, 2.4% on phone bills, and 1.3% on pets, toys, hobbies, and playground equipment, to give just a few comparisons.

All of which fits in nicely with something TckTckTck's Kelly Rigg wrote yesterday in Huffington Post on how Europeans have reacted to the cost of petroleum products:

You may be surprised to find that at least by American standards, Europeans don't complain that much. Where I live, in Amsterdam, gasoline is selling at around $8.50 gallon. But it simply doesn't feature on the political agenda here. People are far more worried about the overall economic situation, jobs, and budget cuts. Maybe it's just a pragmatic acceptance of the "new normal" -- does anyone really believe that oil is likely to get cheaper in the future?

Maybe you think that Europeans are simply more stoical than Americans. But a comparison of American and European GDP suggests that gasoline prices have little bearing on wealth. Countries such as Luxembourg and Norway have comparable levels of GDP to the U.S., while paying roughly twice as much to fill their tanks.

There's no correlation between gasoline prices and quality of life either. The OECD has a nifty little tool to compare this on the basis of several factors, and there doesn't appear to be any connection between low gas prices and high quality of life, even when data for income and jobs is weighted more heavily than other factors.

Some of the difference in reaction no doubt has to do with the fact that it's simply possible to be less car dependent in many more places in Europe than it is in the United States. TreeHugger has documented the car-centric American development model in all its glorious, glaring shortcomings many times so I won't bother to recount that all and will assume you're up to speed on that count.

But the thing that caught me in what what Rigg wrote is how high fuel prices are the "new normal".

There's something in that, expectations of normalcy, what is a "normal", that I think accounts for Americans' general reaction to rising fuel prices. It's the upsetting of what we're used to, more than the actual economic impact (assuming the economic research cited by the Times has accurately portrayed the situation), which gets people all riled up. More than the financials of it all, it's a psychological divide as much as anything else.

A cup of coffee should only cost so much. A pair of jeans should only cost so much. Back in my day a gallon of gas only cost 99¢... et cetera, etc.

All of it a reaction entirely divorced from the reality of how much things should cost based upon a true social and environmental assessment of their impact, or from the actual changes people make in spending habits because of price changes.

Tags: Driving | Economics | Oil

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