Income Elasticity of Gasoline Demand

In this paper we quantitatively synthesize empirical estimates of the income elasticity of gasoline demand reported in previous studies. The studies cover many countries and report a mean elasticity of 0.28 for the short run and 0.66 for the long run. We show, however, that these mean estimates are biased upwards because of publication bias---the tendency to suppress negative and insignificant estimates of the elasticity. We employ mixed-effects multilevel meta-regression to filter out publication bias from the literature. Our results suggest that the income elasticity of gasoline demand is on average much smaller than reported in previous surveys: the mean corrected for publication bias is 0.1 for the short run and 0.23 for the long run.

Reference: Tomas Havranek and Ondrej Kokes (2015), "Income Elasticity of Gasoline Demand: A Meta-Analysis." Energy Economics 47, pp. 77-86.

@article{havranek2015gasoline,
  author  = {Tomas Havranek and Ondrej Kokes},
  title   = {Income Elasticity of Gasoline Demand: A Meta-Analysis},
  journal = {Energy Economics},
  year    = {2015},
  doi     = {10.1016/j.eneco.2014.11.004},
}