Why we freak out over gasoline prices

There’s no other commodity that gets more media attention than gasoline prices.

While we’re generally aware that major expenses like housing and health care are getting more costly, they don’t quite hold the same outrage factor.

Even a single-digit percentage change will inspire endless “Pain at the Pump” segments on local TV news. Here’s one that’s typical of the genre:

It’s also a perennial campaign issue — right now, it’s President Obama’s turn to be attacked for an increase in gasoline prices that short-term government policies can do little to control.

This is not to say it’s a non-issue. For low-income people, fluctuations in the price of gas, like the price of everything else, can have a major impact on household budgets. This is especially true in areas lacking in transportation options other than cars.

But for all the sturm und drang over, say, a 10-cent-per-gallon price increase at the pump, the impact is relatively minimal. The difference in fueling most cars at that price is less than $2, about the cost of a one-way fare on a city bus.

So why all the outrage?

In an interview on the public radio program Marketplace, Harvard behavioral economist Senhil Mullainathan says there’s a relatively simple explanation: Signs.

While most of us couldn’t correctly identify the price of a tube of toothpaste or a head of lettuce, Mullainathan finds it curious that we can nevertheless recite that morning’s gasoline price, probably to the penny.

People go shopping, we spend on so many things, and we just don’t know. We don’t know the prices of things. But gasoline, even when you’re not buying, it’s staring you in the face. Psychologists call this salience. And the salience of gas prices, I think, makes it such a focal point in the debate.

But apart from getting angry, is there anything we can do about high gasoline prices? Using less of it might be a start, as energy analyst Robert Rapier suggests:

The most sensible thing that governments can do is to encourage a move away from gasoline dependence. In that case, even if prices continue to rise, the economy won’t be as susceptible to the price shock. In fact, when people ask me what they should do to protect themselves against high gas prices, the first thing I ask is “What do you drive?” Do your part to limit gasoline’s hold on your life, and you won’t have to hold your breath that a politician is going to solve this problem for you.

(h/t on Marketplace piece to MPR’s Bob Collins)

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