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...

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…