Irish People Vastly Underestimating Cost Of Having A Car
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Why do Irish drivers underestimate their car ownership costs by nearly 50%?
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Doctor Shane Timmins, you're a senior research officer at the ESRI and the co author of a report on the cost of having a car in Ireland. And you say that Irish drivers underestimate the cost of having a car by an average of one thousand euros. So tell us how you reached that conclusion, please.
Afternoon, Matt. Yeah, so we all know that transport decisions are gonna be influenced by costs, but there's actually surprisingly little good data out there on how much it actually costs to run a car. So in this study, uh commissioned by the Department of Transport, we set out to measure just that. But as a behavioral scientist, I'm interested not only in measuring those actual costs, but also what people think it will cost. So we surveyed a representative sample of over 800 motorists. We first asked them to think about how much their care costs them and then to give us their best guess. And then we follow that up by walking them through all of the possible costs they might face.
How did the ESRI study measure actual versus perceived car‑running expenses?
So in addition to things like fuel and insurance and tax, we asked them about repairs, routine maintenance, any fines or penalties they got, parking, uh, cleaning, all of those types of uh possible costs. Now, when you compare people's best guesses to a kind of more accurate estimate, what you expect is some people to overestimate, some people to underestimate, but on average, the wisdom of crowds will prevail and you'll get something that's that's reasonably accurate. That's not what we find though. So we find evidence of a bias whereby seven in ten drivers underestimate their costs. So they guess that it costs around 2,000 euro on average. But when you add add up all of those um individual costs, the total comes to about three thousand and that's excluding the price of the care and excluding depreciation.
So just the running costs of the care.
Wait, I was just what to ask you is that doesn't take financing costs of a loan into account, does it?
No, so if there's financing or loans to come into play, that will add on top of that 3,000 euro. And it also doesn't incorporate the depreciation. So the average care in Ireland is about nine years old, which uh gives an average depreciation from the cares in our sample of about eight hundred euro on top of that three thousand.
What specific costs (fuel, insurance, repairs, etc.) contribute to the €3,000 annual running cost?
Um so that's it's really kind of lower bound estimate, but people think that cares are much cheaper than they actually are.
Do you think if they've fully appreciated the cost they might give up their cars?
Well, that's one possibility. Um, so if people are interested in possibly making some savings, it might be a worthwhile exercise to go through how much your care is actually costing you, and that will take sitting down and going through all of the possible expenses. Now, of course, that's not a choice for everyone, um, to reduce how much they use their care or to uh to to switch to an alternative. It depends what's available to you. Um, but certainly a possibility that some people have uh money. That they could save from it. What's really interesting about the estimate, though, is that we find that bias or that underestimate across different groups. So when we looked at whether it differs by your level of income, your level of education, your age, the type of car you drive, everyone seems to be underestimating how much their car costs.
The one exception, so the people who are slightly better at it, were people who have kids at home. So they were slightly
How do financing, loans, and depreciation affect the true cost of owning a car?
slightly less likely to underestimate, but really it's the majority uh of all groups are underestimating how much their car costs.
Okay, then look at the different types of cars an electric vehicle, a petrol car, a diesel car. Is there much difference in the cost of having any of those categories?
Yes, absolutely. So although everyone underestimates the price of their care, people who are driving EVs, on average, their car costs them about half as much to run as your petrol or diesel care.
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Chapters
6 chapters
1
Why do Irish drivers underestimate their car ownership costs by nearly 50%?
0:00–1:06
2
How did the ESRI study measure actual versus perceived car‑running expenses?
1:06–2:19
3
What specific costs (fuel, insurance, repairs, etc.) contribute to the €3,000 annual running cost?
2:19–3:20
4
How do financing, loans, and depreciation affect the true cost of owning a car?
3:20–4:24
5
Do electric vehicles really cost half as much to run as petrol or diesel cars in Ireland?
4:24–5:21
6
Which driver groups (age, income, car type, families) are most likely to misjudge their car expenses?
5:21–6:34
Speakers
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