Underestimation of the costs of owning and running a car

Highlights

• Novel within-subject comparison of perceived and actual car use and ownership costs.

• Majority (>70 %) underestimate; actual costs are ∼ 50 % higher than intuitive estimates.

• Underestimation appears to be the norm across socio-demographic groups and engine types.

Abstract

Car ownership and use appears less responsive to cost increases and income declines than might be expected, a pattern often attributed to habit formation and lifestyle adjustment. An additional explanation is that motorists may underestimate how much they spend on owning and running a car, but there is little empirical evidence testing this possibility. Using a representative sample of 801 motorists, we compare intuitive estimates of the annual motoring costs with detailed itemised expenditure across all major fixed (e.g., tax, insurance) and variable (e.g., fuel/charging, parking) costs over the same period. Total reported costs are almost 50% higher than motorists intuit. Median intuitive costs were €2,000, while median itemised costs were €2,923, excluding purchase price and depreciation. Most motorists (over 70%) exhibit this underestimation bias, with similar rates across engine types and socio-demographic groups. These findings are consistent with recall failures and salience bias when motorists consider the costs of owning and running a car, with potential implications for the persistence of car ownership. Improving the visibility and aggregation of motoring costs may complement fiscal and infrastructural measures aimed at supporting sustainable modal shift.