An economic crisis during one’s teen years can affect behavior and choices for a lifetime, according to a study of the driving patterns of people who learned to drive during the Iranian oil crisis in the late 1970s.
People born around 1964 who learned to drive in 1979 drove less and used public transportation more than those born before or after them, according to a working paper published Christopher Severen, an economist with the Federal Reserve Bank of Philadelphia.
Severen, together with Arthur van Benthem of the Wharton School at the University of Pennsylvania, analyzed millions of government survey responses from the 1960s through to the 2010s and found that it wasn’t just the Iran oil crisis that affected behavior.
They found out that a spike in gas prices during the people’s teen years affected their driving behavior for their entire lives.
These teens were less likely to drive to work later on and would drive an average of 900 to 1,100 fewer miles each year as adults.
Listen to GHOGH with Jamarlin Martin | Episode 65: Tunde Ogunlana
Part 2: Jamarlin continues his talk with Tunde Ogunlana, the CEO of Axial Family Advisors, a wealth planning firm. They discuss how QE or quantitative easing (money printing) is likely to look different in the next financial crisis in America and some tax benefits with side hustles. They also discuss why estate planning is a selfless act.
“You develop a particular taste for driving from this formative window of when you’re roughly 15 to 18, and that’s influenced by gas-price volatility during that period,” Severen said. “People who experience these large shocks have a lower taste for driving.”
This type of economic crisis effect on people was coined into a phenomenon now termed as “scarred consumption”, according to the University of California economists Ulrike Malmendier and Leslie Sheng Shen.