Demand for gasoline is more price-inelastic than commonly thought

One of the most frequently examined statistical relationships in energy economics has been the price elasticity of gasoline demand. We conduct a quantitative survey of the estimates of elasticity reported for various countries around the world. Our meta-analysis indicates that the literature suffers from publication selection bias: insignificant or positive estimates of the price elasticity are rarely reported, although implausibly large negative estimates are reported regularly. In consequence, the average published estimates of both short- and long-run elasticities are exaggerated twofold. Using mixed-effects multilevel meta-regression, we show that after correction for publication bias the average long-run elasticity reaches − 0.31 and the average short-run elasticity only − 0.09.

► The literature on the price elasticity of gasoline demand shows publication bias. ► Insignificant or positive estimates are rarely reported. ► In consequence, the average published estimates are exaggerated twofold. ► Corrected for publication bias, the average short-run elasticity is −0.09. ► Corrected for publication bias, the average long-run elasticity is −0.31.