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.

Reference: Tomas Havranek, Zuzana Irsova, and Karel Janda (2012), "Demand for Gasoline is More Price-Inelastic than Commonly Thought," Energy Economics 34(1), pp. 201-207.

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Headline result

Price elasticity of gasoline demand: corrected for publication bias, -0.09 short run, -0.31 long run (Havranek et al. 2012, Energy Economics).

How to cite

Tomas Havranek, Zuzana Irsova, and Karel Janda (2012), "Demand for Gasoline is More Price-Inelastic than Commonly Thought," Energy Economics 34(1), pp. 201-207.

BibTeX 
@article{havranek2012gasoline_price,
  author  = {Tomas Havranek and Zuzana Irsova and Karel Janda},
  title   = {Demand for Gasoline is More Price-Inelastic than Commonly Thought},
  journal = {Energy Economics},
  year    = {2012},
  doi     = {10.1016/j.eneco.2011.09.003},
}