Portfolio theory

by on September 16, 2009 at 7:57 am in Data Source | Permalink

Chance a U.S. household that owns a Prius also owns an SUV: 1 in 3.

That is from Harper's Index, October issue.

1 valuethinker September 16, 2009 at 8:26 am

Not new news, Times had something on this a few years back.

It’s optimal for a high income family. Prius for running about town and utility (high fuel economy), SUV for weekends, moving the kids to soccer games etc.

People don’t own Prius to make a statement, they own them because they are economical.

2 Ted Craig September 16, 2009 at 8:42 am

“People don’t own Prius to make a statement, they own them because they are economical.”
There’s little evidence that’s true. Other hybrids don’t sell nearly as well despite being as economical. And a used car with good fuel efficiency would be more economical and better for the environment. The Prius is a signaling device. So is the SUV. Minivans are much better for hauling people and stuff.

3 Gary September 16, 2009 at 8:58 am

Not only are SUVs signalling devices, they also are available with more engine power and a large number of luxury features that are not available in almost all minivans.

The same goes for the prius. Try getting a Corolla with leather and navigation system. If you have enough money to afford more luxury, but want to be kind to the environment (as well as not throw money away at the pump), you would get a prius, not a Corolla.

I hate seeing people trying to prove that hybrids dont pay for themselves until after X number of years. What if I could get a 5 mpg SUV for only $200. Would i buy that because it is more economical for 5 years? What if I actually don’t want to hurt the environment and don’t want to put money into the pockets of people who don’t like America? (and want to hedge against future inflation of gas prices)

4 John Thacker September 16, 2009 at 9:31 am

“I hate seeing people trying to prove that hybrids dont pay for themselves until after X number of years. What if I could get a 5 mpg SUV for only $200. Would i buy that because it is more economical for 5 years? What if I actually don’t want to hurt the environment and don’t want to put money into the pockets of people who don’t like America?”

Your counterfactual makes no sense. With a high degree of certainly, unless the SUV were being massively subsidized by government, if it cost $200 and cost less over 5 years for you it would be better for the environment. If it cost $200, that would be because the manufacturing process, if not the consumption, were particularly environmentally friendly. That sounds ridiculous, but it’s ridiculous to expect one to sell for $200, so it’s even.

If you say, “but a used SUV could be cheaper,” then you should consider that a used SUV is already manufactured. Replacing a used car with a new car is not always better, if the cost to manufacture, transport, etc. is greater than the energy saved.

Hybrids use more rare earth metals, which also helps line the pockets of people who “don’t like America.”

If you “want to hedge against future inflation of gas prices,” you’re agreeing with the basic setup. You’re just disagreeing with their expectation of cost and arguing that the hybrid could be more economical over five years because of the likelihood of gas price increases.

5 nelsonal September 16, 2009 at 9:33 am

Gary
If you don’t want to hurt the environment then you should walk/bike.

If the already made SUV gets 5 (more like 15), and an as yet unmanufactured Prius gets 45, and you aren’t driving very much (or all your driving is highway) it’s entirely possible that the SUV would require fewer resources to get you from point A to point B (but far less smug points). Manufacturing and shipping a car is not a resource free activity.

6 Pete September 16, 2009 at 10:23 am

Here’s a quote I love:

When does a Prius have the same environmental impact as a Hummer? The 95 percent of the time it’s parked.

Probably only loosely relevant to this discussion, but if we’re getting into the environmental impact of different types of vehicles, it’s an important point to recognize. As nelsonal said, if you’re really interested in helping the environment, you should walk or bike, because buying any new car has a vastly higher environmental impact.

7 MonkeyMan September 16, 2009 at 10:51 am

It depends on the SUV (as far as its utility versus a minivan). With one kid and one dog, we bought a CR-V 5 years ago and a Forrester last year. THey cost $10K and $6K less than the most bare bolts minivan. Both get about 30 MPG highway too. Everyone says a minivan is the best but they basically start at $30K (new).

8 Mo September 16, 2009 at 11:05 am

What kind of SUV? A RAV4 has mpg of 22/28, which is better than a Ford Taurus (18/28), a Honda Odyssey (16/23) and an Explorer (14/21). SUV != bad fuel economy, especially now that they are making smaller, more fuel efficient models.

9 Donald September 16, 2009 at 11:22 am

A few points that people in this thread don’t seem to get:

1. A Prius has much more room to haul stuff around than a Corolla, it’s not just about cost-efficiency it’s about what you need in a car.

2. There are used Priuses out there.

3. There are really fuel efficient SUVs, like the Ford Escape Hybrid that may be co-owned with a Prius.

4. The reason the Prius outsells the Civic hybrid is that it is cheaper, gets better mileage and is bigger. Perhaps it is a statement to own a Prius, perhaps it is just a more efficient purchase.

10 valuethinker September 16, 2009 at 11:44 am

Just as a check point, the standard estimate is that of the lifecycle cost of a car, c. 15-18% of total emissions is from the manufacture and 2-3% from the scrappage. That’s on a 200,000 km car life.

This is the best data available: a series of detailed studies on Volvos plus work at the Argonne Laboratory– total lifecycle costs and emissions. The IPCC publications on greenhouse gas abatement have the chapter and verse.

So even if Prius’ cost quite a bit more to make, they are a much better environmental bet than a Ford Explorer (old model range).

Given that much of America you cannot live without a car (most, I would say, except for a handful of cities) then you can make an environmental choice, and it can be a Prius.

As to ‘better hybrids’ the hybrid SUVs don’t get the fuel economy/ low emissions. Prius is on UK government data 104 g carbon/ km driven, whereas the lowest SUV type vehicle is over 170 (and we don’t have your mega SUVs over here).

The diesel Polo (VW) actually beats the Prius on carbon emissions, but of course diesels are a rare item in the US, expensive, and diesels have their own environmental pathologies.

There is the Honda Insight, but it’s new this model year? It’s not such a nice car as a Prius, I don’t think.

You could argue those who drive a Lexus SUV (hybrid) are status seeking.

11 Peter September 16, 2009 at 2:21 pm

What’s wrong with status-seeking? If I’m willing to pay extra for a car that gives me more status, isn’t that just me freely acting according to my preferences? If that’s me, a Prius is great because gives me extra status at a much lower cost than a Mercedes.

12 Shane September 16, 2009 at 7:13 pm

Samson’s got it right – what is the equivalent stat for households NOT owning a Prius (but with at least 2 motor vehicles)?

13 Ricardo September 17, 2009 at 1:14 am

If the already made SUV gets 5 (more like 15), and an as yet unmanufactured Prius gets 45, and you aren’t driving very much (or all your driving is highway) it’s entirely possible that the SUV would require fewer resources to get you from point A to point B (but far less smug points).

Yes, but this blog is called marginal revolution. The question isn’t whether in some scenario an SUV is more environmentally friendly than a Prius. The question is whether at the margin, holding all else equal, purchasing a Prius is better for the environment than purchasing an SUV. The answer is yes unless your price elasticity with respect to miles driven is off the charts.

14 Andy September 17, 2009 at 8:45 am

The iPhone/Prius comparison makes no sense. You can get an iPhone for $99 (w/ contract). I suppose you could get a lesser phone for free, but $99 is hardly the same as the many thousand dollar difference between a Prius and a cheaper car. Also, the iPhone does many things that other phones don’t do. Whereas the Prius does nothing that other cars don’t do (since cars basically only do one thing).

15 ryan September 21, 2009 at 12:16 am

if you only look at households with at least 2 cars, and control for income, does the fact that the household owns a prius have a significant relationship on whether or not the household owns an SUV?

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