Marginal Utility

by Tom Bozzo

Over-extrapolation alert, from Saturday's Times:

"This gas and vehicle thing is tied up with the entire way we lead our lives now," said Steve Hoch, a professor of marketing at the Wharton School of Business at the University of Pennsylvania. The bigger vehicles that are getting slammed by the surge in gasoline prices, Professor Hoch said, are all part of the supersized demographic shift to bigger everything in the last decade, like the sizes of an average home and of the average big-box discount retail store.

"But just imagine if everybody had to get to Costco in a Prius," Professor Hoch added, referring to the Toyota gas-electric hybrid that gets about 50 miles to the gallon. "How would they bring the 43 rolls of toilet paper home? This shift to higher prices is not going to be easy."

Hmm, you could actually see where you were backing up, not being hemmed in by land-behemoths?

Most of my observations of full-sized SUVs are as wildly inefficient commuter vehicles for single occupants with cell phones seemingly surgically attached to their ears. I haven't found the 10-cu. ft. trunk of my car constraining during diaper runs, and the Prius has quite a bit more interior volume than my car. Then there's the likes of the Passat TDI wagon, which has interior volume in the ballpark of mid-sized SUVs and half the fuel consumption.

Families with lots of children may need big SUVs or vans to provide enough seats, but even on that front I'm reminded that neighbors of ours recently packed two adults, two teenagers, a seven-month-old baby, four bikes (via roof rack) and stuff for a week to Minocqua in a '92 Passat wagon.

In the bigger picture, what worries me is that we'll get policies that take the organization of suburban sprawl life as immutable consequences of primal human desires, rather than as an adaptation to cheap private transportation that may be abandoned as quickly as it was thrown up when market forces turn on it. (Policies that seek to promote low gas prices versus low fuel consumption may have this effect.) Human life has been successfully lived without big-box stores, even in my lifetime, if you can imagine that. This is not to say that I disagree at all with Prof. Hoch's conclusion that the transition will be hard, especially as it implies that the values of today's half-megabuck McMansionettes are no more privileged than those of the once-grand houses owned by the elites of small (and not-so-small) towns along, say, the route of the Erie Canal.

But I think an underappreciated feature of neoclassical microeconomics is that while consumers may in principle want everything, what they actually choose to have is regulated by relative and absolute prices. So when self-mobile freedom is sufficiently expensive, sooner or later other forms of consumption will be substituted for it. The question is whether the corporate welfare state will allow this to happen.