Consumer's Surplus with a Racial Apology? Black Relative to Non-Black Inequality in the Welfare Gains of Fuel-Efficient Cars and Trucks

Abstract

This paper considers whether race conditions the welfare gains associated with the purchase of cars and trucks that comply with National Highway Traffic Safety Administration Corporate Average Fuel Efficiency Standards. We utilize data from the General Social Survey on respondent stated preferences for the extent to which they value fuel-efficient cars and trucks to estimate the maximum market price they are willing to pay for fuel-efficient cars and trucks. Multinomial and Binary Logit parameter estimates from an inverse demand maximum price valuation specification reveal that relative to non-black Americans, black Americans place less value on fuel-efficient cars and trucks. Our results suggest that federal Corporate Average Fuel Efficiency Standards policy is a source of inegalitarian and racially stratified welfare outcomes as relative to non-black Americans, black Americans gain less consumer's surplus from fuel-efficient cars and trucks.