Underestimation of the costs of owning and running a car

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. Costs are almost 50% higher than motorists think. 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.