Why Rising Prices Don't Affect Behavior That Much

I took a business trip yesterday that involved about 400 miles of driving. I filled up once, spending about $55. I thought about it, but the value of the trip was worth it. I'm taking a much longer trip this weekend - this time it's a vacation. Gas prices are not stopping me. Cassandra explains why.

Via Glenn Reynolds, all the hyperbolic hand-waving on the nightly news aside, rising gas prices don't seem to have had much of an effect on local leadfoots:

TIGERHAWK LOOKS AT GASOLINE PRICES AND BEHAVIOR MODIFICATION, and doesn't find much of the latter. "When I pulled on to the New Jersey Turnpike I set my cruise control at 66 mph (substantially faster than I would drive -- 55 or so -- if I wanted to maximize my fuel economy), got in the right lane, and started counting cars that passed me. I was passed by more than 40 cars before I came up behind another vehicle going more slowly than me, and it was a step van trying to exit. I gave up counting when more than 100 cars passed me without me passing anybody. At 66 miles per hour."
Yeah, I noticed that people weren't slowing down much this weekend -- and where they were it seemed more connected with the heavy holiday-weekend police presence in a few areas than with fuel-saving, because once the cops were gone people sped up again.

UPDATE: From the comments: "Virtually nobody is willing to substitute their time for the money they would save slowing down, and several have offered very cogent economic reasons why they would not. It is a little indication of the enormous cost to the economy and to our personal freedom imposed by the government actually mandating a 55 mph speed limit."

But it's not just a question of time. The time vs. money tradeoff has been exaggerated, too. In real terms (how long does it take the average American to earn a gallon of gasoline) the price of gas has not gone up as drastically as we've been lead to believe:

Read the whole thing, then look at this chart:

When it comes to how hard we have to work for food and fuel, we still face far lower burdens than our grandparents did. Living standards rise on the ability to use productive resources to churn out more goods and services—that is, to advance productivity. As the economy has become more productive decade by decade, Americans have reaped the gains, first and foremost by consuming more.
There’s more to the good life than goods and services, however, and we’ve taken some of our added productivity in other ways. We’ve gained more leisure time, improved our working conditions, enhanced safety and security, and added variety to our choice set. All of these benefits become increasingly important as we climb up the income ladder.

The lament-filled anecdotes about long hours and low pay just don’t stand up to the test of hard data. Real total compensation—wages plus fringe benefits, both adjusted for inflation—has been rising steadily for several generations (Fig. 4). Over time, the fringes have become a larger share of the rewards for work, dampening the statistics on wage increases. At the same time, we’re spending less time at work. An average workweek has fallen from 39.8 hours in 1950 to 36.9 hours in 1973 to 33.8 hours today.