Estimate the Rebound Effect for Household Vehicle Usage Choice by Regression Models

The recent Notice of Proposed Rulemaking (NPRM) published by the Environmental Protection Agency (EPA) proposed less stringent fuel economy standards for a safer affordable fuel-efficient (SAFE) vehicle rule for passenger vehicles and light trucks. With the advancements in the vehicle technology and improving fuel efficiency, the per-mile driving cost of passenger vehicles will reduce. However, this reduction in the driving cost may result in the rise of vehicle miles traveled, which is referred to as the rebound effect. Motivated by observing this unusual behavior on vehicle miles traveled (VMT) as a result of vehicle-related taxation schemes, this study aims at understanding the elasticity of VMT to fuel economy, which will be the reflection of the rebound effect, as well as the difference between elasticity of VMT to fuel price and fuel economy using 2017 National Household Travel Survey (NHTS). The magnitude of the elasticity of VMT to fuel economy is estimated to be between 0.19 and 0.37. This study aids in contemplating the effectiveness of the standards at reducing fuel utilization and related greenhouse gas emissions