Tuesday, January 14, 2014

Conspicuous conservation: The Prius Halo and Willingness to pay for environmental bona fides

Abstract: This paper develops a theory of conspicuous conservation, a phenomenon related to conspicuous consumption in which individuals seek status through displays of austerity amid growing concern about environmental protection. We identify a statistically and economically significant conspicuous conservation effect in vehicle purchase decisions and estimate a mean willingness to pay for the green signal provided by the distinctively designed Toyota Prius in the range of $430 to $4,200 depending upon the owner's location. Results are related to the growing literature on green markets and suggest policy should target less conspicuous conservation investments that will be under-provided relative to those that confer a status benefit.
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Prius ownership and Democratic party share of registered voters in Colorado (one green dot denotes 5 Priuses).
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Prius demand with and without the Conspicuous Conservation Effect.

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