How Do People Choose Cars

Behavioral Economics There is a lot of predictability and patterns when it comes to economics. There are many examples that one can point to. First, there is a bit of a cycle to things. Even when there are economic "booms" in the United States or other capitalistic countries, there are eventually "busts" of varying size and degree called recessions. Most of the time, the recessions are fairly brief and not a lot of damage is done.

Other times, one sees recessions like the Great Depression in the 1930's and the Great Recession in the 2000's. There was also the fairly dark period that occurred during the latter part of Jimmy Carter's Presidency and into the early 1980's when Reagan took over (24/7 Wall Street). Of course, there are behaviors that are expected and realized when economic travails come. People tend to tighten their spending, stick to their current job if they have one and so forth.

Even when there are economic issues, there are some things that people must have or consume (Crawford). Examples include gasoline, food, water and, for many, a reliable and running vehicle. There are some cities and situations where a car is not an absolute need. Some people happen to live within walking distance of everything that they need to be concerned about while some cities are built based on a car being a bit more of a nuisance than being necessary.

A sterling example of such a city is New York City (NYCEDC). As noted above, purchasing decisions are usually done with much more discretion when economic times are tight. This is a perfect example of behavioral economics. There is an economic behavior that is started, stopped or changed as a result of perceived or actual economic circumstances in a city, state or country. Even so, cars are often necessary so spending on cars will happen on some level no matter what.

When economic times are tight, people will be more prone to just fix their existing car unless they feel very comfortable about their economic circumstances or they are oblivious (or ambivalent) about what others (e.g. the media) are saying about the economy (Crawford). With all of the above said, the motivations for which car to buy usually comes down to one of four things. Those things would be cost, safety, nation of origin and performance.

The economic experiment that will be studied in this report will analyze and assess how people react based on those four dimensions. Further, there will be a verification and assessment as to how accurately the people taking the survey are looking at the car industry and the buying progress. For example, Chrysler/Dodge has traditionally been deemed a carmaker that is based in the United States. However, Chrysler/Dodge is actually majority-owned by automaker Fiat, which emanates from Italy and has a headquarters in the United Kingdom (Fiat).

Something else that can happen are outlier events and situations that influence what cars people buy and why. The author of this report will give three very good ones. The first happened back in the early 1980's and that was Ford Motor Company manufacturing cars that they knew to be unsafe. Ford Pintos of those day were made with a gas tank assembly that was especially prone to explode or otherwise catch on fire if the car was struck from behind, even at lower speeds.

The solution to that problem was known to Ford before they started selling the car but they made a decision, based on cost alone apparently, to skip making the car safer and they sold the car as was originally designed. As one might expect, there were a number of accidents involving Pintos where the gas tanks ruptured and some people did indeed die as a result (Wojdyla & Limer).

A second example of an outlying even is the most recent time that General Motors filed for bankruptcy, which was during the height of the Great Recession from 2007 to 2009. Automakers filing for bankruptcy over the course of the history of the automobile is nothing new. What made the Great Recession GM bankruptcy unique is that the United States government (i.e. the taxpayer) bailed out General Motors by buying an equity stake in the company.

In other words, GM bought stock in the company to the extent they largely controlled General Motors, not unlike what Fiat did with Chrysler (Higgins). However, Fiat is a private sector business and the United States government is not. Anyway, there was a palpable reaction to this turn of events as many people lamented that the government bailed out General Motors and/or that the government owned the company.

Indeed, it is exceedingly rare for the public sector to own and operate businesses in the United States unless it is something like a utility service (e.g. electric, water, etc.) or something else that is closely aligned with what public sector agencies typically provide. One of the common pejoratives about General Motors was how it was called "Government Motors" by a lot of people.

General Motors has since extricated itself from that ownership structure and is now a normal public company just like any other company traded on NASDAQ or the Dow Jones market (Higgins). The third and final major outlier that will be discussed is the nation or origin conundrum. The author briefly mentioned this matter with the Fiat/Chrysler relationship. It is indeed true that the "nation or origin" is one of the main points and facts that people use when it comes to buying a car.

However, what has become increasingly boggling to study is whether people really know what they're buying. What the author of this report means by this is that many cars that are owned and sold by foreign nameplates are actually built partially or entirely in the United States. Conversely, many cars that are built and sold as "American" cars are not actually built in the United States. For example, Ford vehicles like the F-150 and the Mustang are mostly or entirely built in the United States.

However, there are some "American" cars that are built outside of the United States. For example, the Dodge Challenger, even before Fiat took over as majority owner, has been built in Canada. One can look at "foreign" cars as well. Mid- to higher-end luxury cars are usually made overseas and then imported into the United States. The best examples are the "exotic" nameplates like Ferrari, Lamborghini and others. However, many "foreign" cars are made here. Perhaps the best example would be Kia and Hyundai.

Both are South Korean carmakers and they are actually partially linked as a partnership as the former is partially owned by the latter. Anyway, the vast majority of the cars are made in the United States, mostly in factories that dot the southern United States including states like Alabama and the like. Other foreign car companies like Toyota and Nissan (both Japanese in origin) do the same thing. The vast majority of their cars are made in whole or in part in the United States.

Those that are not made here are done in others parts of North America like Canada and Mexico (Car Scoops). The above does a satisfactory job, at least in the view of the author of this report, of framing what shall be the foundation and structure of this study.

With all of that prefacing out of the way, the author of this report is seeking to answer the following questions: What dimension, of the four main ones, do people place the highest importance on? Do they place heavy interest, on the whole, on a single dimension or do they find more than one dimension important? (e.g.

price alone versus price/national or origin in combination) Is nation of origin as important as it has been in the past? Do the survey-takers base "nation or origin" on where the car is made or who owns the company? For example, would they consider Dodge cars made in the United States American because of where they are made or Italian based on the Fiat ownership stake in Chrysler/Dodge? Do people taking the survey have a good understanding of the global nature of the auto industry including: Traditionally American companies being owned by foreign companies (e.g.

Chrysler) Non-American companies having much or all of their American operations entirely or at least mostly in the United States/North America (e.g. Hyundai) Are people getting a complete picture of the safety and "value" of cars made and sold for the United States market? It is important to answer these questions because having a more informed market makes for better consumers. Indeed, it is not avoidable that some people will hold nationalistic opinions when it comes to buying their cars, just as one example.

However, it would perhaps be a bit awkward if someone spouting those types of views actually owns a Dodge which was made and sold while the car company is under Italian ownership and control. Indeed, GM got singled out for being owned by the government but everyone is keenly aware of the Fiat/Chrysler arrangement. Similarly, Ford is often held in a different light than Dodge/Chrysler and General Motors because they supposedly did not take government money during the Great Recession.

While they did not file for bankruptcy (like GM did) and while they certainly did not need as much government assistance as GM did, they certainly did get some assistance in the form of low-interest loans. While they did have to pay them back, the government's investment in GM was paid back as well. The Troubled Asset Relief Program that helped the banks during the Great Recession and the bailout of AIG were much the same way. That money was paid back and with interest.

As far as what researchers have done in the area, they have done a lot of review of what supposedly drives consumers and their choices. What they have often failed to tough on sufficiently (if at all) is whether the consumers in question are making informed decisions and what their logic system really is. Quantitative surveys can figure out the "what" of why people make choices. However, they often miss out on the "why" that underpins those decisions.

Not effectively and completely studying the "why" part can lead to incomplete or incorrect conclusions being made about consumers, what they do and why they do it. Design There will be two "treatments," if you will. In the first treatment, there will be an assessment of what is important to the person taking the survey. There will be no trickery or unstated motives.

For example, the author will be asked to rate, on a 1 to 10 scale, how much they value each of the four main dimensions of car buying as mentioned in this report. Again, those dimensions are safety, nation of origin, performance and price. The second treatment, on the other hand, will be more of a verification of whether the person taking the survey is using the right context and facts when they consider the four dimensions as mentioned before, with much of the focus being on nation of origin and safety.

The reason those two dimensions will be singled out is because many people are ill-informed or under-informed when it comes to the facts and traits of the industry as mentioned earlier in this section.

Just a few examples of the second treatment will be whether they know the ownership structure of the major car companies, whether they know about the safety history and problems of each carmaker, whether they know the financial history of each company, whether they know if GM is no longer owned by the American taxpayer and so forth.

Examples of safety issues over history that will be asked about include the Pinto gas tank flaw, the auto-acceleration issues that Toyota had a few years ago and the recent recall issues that General Motors has had, just to name a few. The average for each value will be tallied and there will also be an assessment of whether people have more than one (two, three or four) values above "5" on each rating scale. How many people with multiple 5+ variables will be looked at.

The overall average score for each of the four dimensions will be measured and reported on as well. Something else that will be looked at is the favorite car companies (no limit will be given) of each person. Those nameplates will be compared to how that person favored (or did not favor) the nation or origin. It will also be asked specifically what country's cars are their most favorite. The obvious options will be American (e.g. Ford, GM), Japanese (e.g. Toyota, Nissan) and German (e.g. BMW, etc.).

It will be important to see if their national preference (even if it is not American) jives with what they know about the automotive industry and the global nature of the same. There are a few nuisance variables that will have to be dealt with as part of this study. One major one will be racist or at least xenophobic views about the Japanese or Koreans.

While this variable would certainly influence the nation or origin dimension, the author of this report is not really doing a true sociological study about the minutia of why people think the way they do, at least in that way. The author wants to know why one dimension is important over another (the first treatment) and whether they know the true and global nature of the car marketplace (the second treatment). Indeed, a person can favor car companies and not be a bigot.

However, whether they know about Fiat's ownership of Dodge/Chrysler and/or whether they know that a ton of Hyundai, Kia and Toyota cars are made on American soil. Whether they focus on nation of origin and whether their car buying decision relating to the same is informed are the two main points of analysis in this survey. Bigotry and racism are not irrelevant to the proverbial equation but that is not what is being studied.

Opening up the study to that variable would open up a lot of other things and the author of this report is trying to keep things focused and at least fairly specific to the major dimensions of car buying and what drives people when they do the same. The other nuisance variable that will have to be dismissed as much as possible is the prevalence and pollution that has led to the stunted views of each person involved.

Of course, the source of this discord and incorrect information could include things like personal conclusions, views passed on from parents and other people close to them, biased information from the media and so forth. While the source of the confusion and lack of knowledge is certainly not irrelevant, the author of this report will just get into what they know and what they do not. What they do or do not know will be compared to their general opinions about a very specific thing ..

the things they focus most on when they get cars. The amount of participation that will be required by each participant will not be much. Indeed, there will be about thirty questions on each survey so it will probably take no more than five to ten minutes for the survey to be completed. The subjects for the study will be adults who definitely own cars.

While it will be more of a convenience survey, only people that are adults and that have bought a car in the past will be included. Anyone that simply drives someone else's car (e.g. college student driving mother's car) will be excluded because they have not had any proverbial "skin" in the game when it comes to buying cars. The cost of this survey will be fairly nominal.

Basically, there will be a stack of surveys, a box with a slit so that people can drop in the survey and maintain their anonymity, pens and a table with a few chairs for people to take the survey. There will also be an online survey done so as to get more people that might not be willing to do the survey in person. They will not be asked their name or other personally identifiable information.

To screen out people that are not desired, it will be asked if they are an adult and whether they have ever purchased a car from a dealer. If the answer to either question is "no," they will be excluded. For those that do make it past that point, they will be asked their age range, their gender and how many cars they have bought.

The latter question will be included so as to see if there is a shift over time when it comes to the main motivations when car-shopping. For much the same reason, it will be asked if the survey-taker has children. This would (and really should) have an obvious effect on the "safety" dimension so this cannot be ignored as a demographical question to ask. The desirable amount of subjects that will be desired is at least one hundred.

It is probably safe to say that most of them will come from the online iteration of the survey. However, anything more than one hundred would be perfect. The author will spend a couple hours asking for responses for the in-person survey and twenty-four hours for the online version. There will be an elimination of surveys that are odd or seemingly off-based. For example, if someone answers all 1's for the four dimensions, that survey would be discarded. The same thing would happen for someone that has all 10's.

Any surveys with profane, offensive or other responses that lend anything to the idea that the survey was not taken seriously (which some people are won't to do on purpose) will be discarded. The budget for this survey will be fairly nominal. Really, if the survey costs more than one hundred American dollars, it would be a shock to the author of this report. In short, not a lot of money is needed to get this survey done.

The devil, rather, would be in the details of how the questions and number-scale questions are worded and how the results, who is listened to, who is not and how the results are measured after the fact. The design and budget of the study are intentionally being kept as simple and manageable as possible to keep things basic, focused and free of polluting variables and information as possible.

Hypotheses The hypotheses of this report shall be as follows: It is predicted that the most prominent of the four variables will be cost.

Safety and/or performance will probably be second Nation or origin will probably be fairly high but almost certainly will not be at or near the top A good many of the people will probably have a weak or terrible understanding of who actually owns the car companies and where they are made for both American and non-American companies There will probably be at least two variables that are very prominent at the same time.

The author predicts that these two will probably be safety and cost with performance and nation of origin bringing up the rear. Analysis A lot of the analysis of this study has already been mentioned. However, rendering that data in a way that "pops," as the assignment summarizes it, will absolutely be done. It will be done in.