The Economic Perspective: “Remembering High Gas Prices and Gas Lines”

I’m Mary Walden, with economist MW, welcoming you to the economic perspective.   Today’s program looks at remembering high gas prices and gas lines.  Mike, economists are always looking for factors that affect the behavior of consumers.  Clearly income and prices are two key determinants.   But I understand a new study suggests memories of challenging economic times can have lasting impacts on economic behavior.  Please explain.

  • Probably the best example is people who lived through the Great Depression of the 1930s – they carried a long-held skepticism of financial institutions
  • A new study shows those who lived through record high gas prices and gas rationing in the 1970s – something we experienced – has had lasting impacts
  • Specifically, after adjusting for other factors, a new study shows those folks have permanently reduced their driving and gas purchases
  • Shows us that an economic shock can stay with us for a long time
  • Some see the same with those young people living through the Great Recession – especially if the recession dramatically hurt their parents
  • They are less likely to spend and borrow
  • I’m MW

And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.