Environmentally friendly replacement of automobiles

Environmentally friendly replacement of automobiles

JOURNAL OF ELSEVIER Journal of Economic Psychology 16 (1995) 513-529 Environmentally friendly replacement of automobiles Agneta Marell a,d,*, Per D...

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JOURNAL OF

ELSEVIER

Journal of Economic Psychology 16 (1995) 513-529

Environmentally friendly replacement of automobiles Agneta Marell a,d,*, Per Davidsson b,d, Tommy G~irling c,a a Department of Business Administration, Ume~ Business School, Umed, Sweden b Department of Business Administration and Economics, J6nk6ping International Business School, J6nk6ping, Sweden c Department of Psychology, G6teborg University, G6teborg, Sweden d Transportation Research Unit, Umea University, Ume[t, Sweden

Received 16 December 1994; accepted 21 April 1995

Abstract A telephone survey of 100 automobile owners was undertaken. One aim was to determine whether the timing of replacement purchases is related to the difference between an owner's assessment of the current quality of their automobile and their aspiration level. Another aim was to investigate whether information indicating that either early or late replacement is better for the environment affects the timing of replacement through an influence on the aspiration level. Sets of path analyses confirmed that replacement purchase intention was causally related to the current level and the aspiration level. An indirect effect of information was furthermore, observed through changes in the aspiration level. Degree of environmental concern tended to modify this effect. Replacement purchase intention was found to predict actual purchase.

1. Introduction

A most serious threat to human habitats is the continuous and accelerating use and destruction of scarce natural resources, many of which are essential for survival (Pawlik, 1991; Stern, 1992; Stern and Oskamp, 1987). * Address correspondence concerning this article to A. Marell, Transportation Research Unit, Ume~ University, S-90187 Ume~, Sweden. E-mail: [email protected]; Fax: +46 90 166-674; Tel.: +46 90 166-114. 0167-4870/95/$09.50 © 1995 Elsevier Science B.V. All rights reserved SSDI 0167-4870(95)00024-0

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The ongoing trend has its origin in .population growth in conjunction with consumption habits (Hardin, 1968; Olander and ThOgersen, 1994; Ottman, 1993). Some types of consumption directly affect the environment, and some indirectly through demand which controls production. Waste disposal and excessive energy and material use are examples of direct effects where consumption decisions made by households appear to be major causes of the problems. The waste and overuse problems may to some extent be mitigated if consumers decide to postpone their replacement of durable products such as automobiles and household appliances whose manufacturing, use, a n d / o r disposal are detrimental to the environment. An indication of its importance is that a majority of purchases are replacements in product categories with a high market penetration such as automobiles, refrigerators, and TVs (Bayus and Gupta, 1992). Replacement rates are also high for products with less market penetration such as VCRs and CD players. A crucial question is whether consumers replace durable goods before they are technically worn out? In the scarce previous research addressing this question, product failure was seldom found to be an important reason for replacement. For instance, Wilkie and Dickson (1985) observed that more than 60% of recently replaced refrigerators, freezers, washers, and dryers were bought for other reasons than product failure. A study of the main reasons for early replacements of color TVs showed that market price had the greatest impact on the timing of the replacement (Bayus, 1988). In fact, a higher market price could increase duration of ownership by more than a year. At the same time, Bayus (1988) concluded that advertising may decrease ownership duration by almost half a year. The effect of change in styling has also been examined (Bayus, 1988; Hoffer and Reilly, 1984; Menge, 1962). Hoffer and Reilly (1984) found indications that a major change in style was a determinant of the timing of replacement for both companies and other buyers of automobiles. Bayus (1988) likewise observed that style and new features had an effect on the timing of replacement of TVs. Furthermore, Bayus (1991) found that early replacement of automobiles was frequently made for styling reasons, whereas cost-related reasons were more common for later replacements. In addition, automobile owners who replaced early were wealthier but less educated than those who replaced late. Despite its obvious importance in many cases, the complex, multifactorially-determined nature of the timing of durable-replacement purchases does not seem to have been an important target for theories of purchase

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decisions. An influential theory such as that proposed by Bettman (1979) accounts for the purchase of nondurable goods. Other theories (see review in Friedman, 1988) primarily attempt to explain brand choices. In doing so they fail to provide a theoretical account of timing, which is the dimension of purchase decisions of most concern because of its important consequences for waste disposal and energy/material overuse. An exception is Pickering (1978,1981; see also Winer, 1985) who theoretically highlighted several important differences between replacement purchases and purchases of new products for the first time. Econometric models of automobile ownership (e.g. Gilbert, 1992; Golob, 1990; Train, 1986) have targeted the joint timing of replacement and choice of type of automobile. Although such empirically estimated models provide information about factors affecting replacement purchases, they do not describe (or else describe inaccurately) the preceding decision-making process. In the following section a few important features that are likely to characterize this process are discussed.

1.1. Conceptualframework and study hypotheses It is plausible that an assessment of a currently owned durable product in some way affects the timing of its replacement (Bayus and Gupta, 1992; DeBell and Dardis, 1979). However, to account for replacement before the owned durable is worn out, it is assumed that an aspiration level is also taken into account. In accordance with Simon's satisficing principle, the aspiration level is defined as a minimally acceptable quality (Simon, 1955,1956). Since durable products in general possess many attributes, the aspiration level pertains to a composite perceived quality. At present it is left unspecified how this perceived quality is related to the product attributes. 1 The aspiration level and the current quality level may both be based on the same attributes. Yet, it is not assumed that the assessments on each attribute are influenced by the aspiration level, neither that the aspiration level for each attribute is influenced by the assessments. l i t is conceivable that a conjunctive rule for making multiattribute choices would apply here (Svenson, 1979): If the current assessments are lower than an aspiration level on one attribute, then a replacement purchase is considered. However, the chosen research strategy is to first demonstrate that the major features of the framework can be empirically verified, and then to elaborate on these features. Also for strategic reasons, quite strong assumptions are later made concerning the mediating role of the aspiration level. The possibility of falsifying the derived model is thereby increased.

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Aspiration level

Replacement purchase intention

I

k H G°asettiHng Comparison

Current level

Competing goals

Marketsearch

Replacement purchase

Fig. 1. A conceptualization of factors affecting replacement purchase.

As illustrated in Fig. 1, it is assumed that an owned durable becomes a candidate for replacement when assessed as being worse than the aspiration level. However, several mediating steps are assumed to take place before a replacment is made. These steps include the coordination of purchase goals (Dickson et al., 1983; Hebden and Pickering, 1974; Soutar et al., 1990), the formation of a replacement purchase intention (Brumer and Pomazol, 1988), and market search (Bettman, 1979; Punj, 1987; Punj and Staelin, 1983). The implication which the present study will subject to test is that the replacement purchase intention increases in strength with

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the difference between the assessment of the current quality level of the owned product and the aspiration level. Obviously several factors may influence replacement purchases. The aspiration level has a key role since it is supposed to mediate influences of many of these factors, such as expected changes of the economy (i.e. consumer confidence, Katona, 1975; Van Raaij and Gianotten, 1990), changes in taste, changes in sociodemographic factors, and marketing of technological innovations. The mediating influence of the aspiration level may be understood as an effect of directing attention towards different attributes. For instance, if in a certain product category styling becomes an important component of the aspiration level, the assessment of the quality of the currently owned product will be more influenced by styling. For a product such as an automobile, reliability is likely to be important, in which case the assessment will be influenced by this factor. Product failure thus becomes essential to anticipate and avoid. In this way the aspiration level both changes and causes changes in the assessment of the current durable. However, since the assessment of the current level on different attributes is assumed to be unaffected by the aspiration level, no dependency is expected between the composite assessment of the current level and the composite aspiration level. Because the timing of replacement purchases has an impact on the environment, consumers who are more concerned about a deteriorating environment may differ in their timing from those who are less concerned. Consistent with the conceptual framework it is hypothesized that such a difference would affect replacement purchase intentions through an influence on the aspiration level. However, as Fransson et al. (1994) documented in their review, environmental concern has generally been found not to have a strong relationship with environmentally friendly behavior. Many factors seem to moderate the relationship. If the goal is to alleviate adverse environmental effects, perhaps automobiles are the single most important product category to focus on. The negative effects for air pollution, energy and material waste of the usage of personal cars are well documented (Stern and Oskamp, 1987). A problem facing environmentally-concerned automobile owners intending to replace their automobiles is that they do not usually know what will happen to the replaced vehicle. Due to enforcement of regulations and technological innovations it is also difficult for them to know what is better for the environment: should they purchase a new automobile which is more environmentally friendly than the old one, or hold on to the old one and

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thereby not contribute to an increased demand for automobiles? Although an automobile owner is concerned about the environment and is willing to act accordingly, a lack of knowledge of the appropriate course of action may prevent him or her from doing this. Thus, if environmentally concerned automobile owners lack knowledge of the best timing of a replacement, credible information of this kind may affect their intention to replace.

1.2. Study objectives The objectives of the present study were to investigate (i) whether or not an automobile owner's intention to replace their automobile is directly related to the difference between the assessment of the quality of the currently owned vehicle and their aspiration level, (ii) whether or not automobile owners who are concerned about the environment are in this respect affected by information about what timing would have the least detrimental effects, and (iii) whether or not such an effect of information is mediated by changes in aspiration level.

2. Method To achieve the study objectives a telephone survey was conducted of a randomly selected sample of automobile owners. As part of the interview three leading questions were asked with the intention of conveying either the message that early replacement of the automobile is better for the environment or that late replacement is better. A manipulation check later in the interview consisted of asking interviewees a question about their opinion in this respect. A randomly determined group of subjects were asked the question communicating that early replacement is better, another group the question communicating that late replacement is better. Other questions were asked with the aim of measuring the perceived quality of the currently owned automobile, the aspiration level, the degree of environmental concern, and the strength of the intention to replace the automobile. In addition, data on sociodemographic factors were collected. Information about actual replacement purchases was acquired from available registers at a later point in time. Only questions which were subjected to data analyses are reported verbatim below. Questions which are only briefly described or omitted were

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either unrelated, were similar to those described but did not contribute anything over and above them, or were similar to those described but the response rate was much lower.

2.1. Sample The sample of respondents was selected by means of a procedure entailing the following steps. During specified hours on different days and at different times of the day, a research assistant first registered all automobiles stopping at six major gasoline stations in the municipality of Ume~. In the national register of automobiles the names were found of owners of those registered automobiles which were less than 10 years old. Usable data for a final sample of 100 respondents were obtained after excluding 9 who did not answer the phone after five different attempts, 6 whose telephone numbers were inaccessible, who were ill, or who were not fluent in Swedish, and 3 who refused to participate. Respondents were randomly assigned to the condition in which different information was conveyed.

2.2. Interviews The telephone interviews were conducted by four trained students. They consisted of two parts with questions which were the same in both conditions except for the three leading questions designed to convey different information. On average the interviews were completed in about 30 minutes. In an introductory part of the interview three questions were asked to determine whether the registered owner of the automobile was the household m e m b e r (in multiperson households) who was primarily responsible for the decision when to replace it. If the registered owner stated that he or she had at least as much influence on this decision as any other household member, the interview with this interviewee proceeded. In a few cases when this was not the case, the household member who was said to have this influence was interviewed instead. Questions were also asked to confirm that the automobile owner knew the make, model, and year of the automobile. In addition information was obtained about the purposes for which the household used the automobile, household size, and age of household members. Other sociodemographic questions concerning education, occupation, and income were asked at the end of the interviews.

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Table 1 Questions conveying information about environmental effects of the timing of replacement of automobiles Early replacement better Question 1. Do you know that a new automobile is twice as environmentally friendly as an old one? Question 2. Do you know that emissions from old automobiles causes a 25% reduction in the growth rate of the forest? Question 3. Do you know that emission of carbon dioxide from old automobiles contributes to global warming by increasing the average temperature by 2 degrees? The figure for the production of new automobiles is 1 degree. Late replacement better Question 1. Do you know that it is twice as environmentally friendly to keep and drive an automobile longer due to the material use and emission from the production of new automobiles? Question 2. Do you know that emission from the production of new automobiles causes a 25% reduction in the growth rate of the forest? Question 3. Do you know that emission of carbon dioxide from old automobiles contributes to global warming by increasing the average temperature by 2 degrees? The figure for the production of new automobiles is 3 degrees.

Information was also acquired about type and frequency of use of the automobile, its different characteristics including cost and year of purchase, depreciation value, recent repair costs, and number of other automobiles available to the household. The second part of the interview started with the leading questions (Table 1). The respondents answered yes or no. If the respondents asked, the interviewer explained that the (faked) information was available in international newspapers which were known for their reliability. Aspiration level was then measured with a set of three questions aiming at assessing the lowest acceptable perceived quality. First, respondents indicated on a good-bad scale, with 0 to 100 corresponding respectively to the worst possible automobile (legal to drive) and the best possible (a brand new) automobile. The same question was repeated twice with the good-bad dimension replaced with high-low quality and high-low standard, respectively. Translated from the Swedish the question was literally phrased: "Please indicate on this scale what is the worst level (lowest quality/lowest standard) of automobile you find it acceptable to own?" After two questions about knowledge of and interest in technological innovations, seven questions were asked with the aim of measuring environmental concern. The question to be reported below was a direct

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self-report measure of environmental concern. Subjects indicated how environmentally concerned they were on a scale from 0 to 100 corresponding to very little and very much. In addition a question was included with the aim of checking whether the information about environmental effects of early or late replacements had affected respondents. On a 5-point scale ranging from much more to much less environmentally friendly, subjects responded to the question whether it would be better for the environment to replace their automobile early rather than late. The perceived level of quality of the currently owned automobile was then measured in a parallel way to that in which aspiration level had been measured. On the same scales from 0 to 100 respondents indicated the current quality level of the automobile they owned. Finally, questions were asked about replacement purchase intentions. The design of these questions followed earlier studies (Pickering, 1984). In one set of questions respondents indicated on 7-point numerical scales ranging from no intention to very strong intention whether they intended to replace the automobile in 3 months, 6 months, 12 months, or 2 years. The other set of questions asked how likely respondents were to replace the automobile in 3 months, 6 months, 12 months, and 2 years. Subjects responded on a 7-point scale with verbally defined steps defined as absolutely certain not, very unlikely, rather unlikely, neither likely nor unlikely, rather likely, very likely, and absolutely certain. For both sets of questions the interviewer stopped if respondents indicated a 7 or that they were absolutely certain.

2.3. Register data Additional data on actual replacement purchases were obtained from the national register of automobiles. Approximately 10 months after the interviews, it was determined which automobile owners no longer owned their vehicles.

3. Results

3.1. Mean comparisons Table 2 displays for a number of the variables the differences between the groups who were given information that either early or late replace-

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Table 2 Comparisons between the groups of subjects who either received information that early or late replacement of their automobiles is better for the environment

Sex a (% men) Age b Highest educational level University degree (%) High school degree (%) Household income (Swedish Crowns) Environmental concern (0-100) Information questions (% yes) Question 1 Question 2 Question 3 Manipulation check (1-5) c Aspiration level d (0-100) Current level (0-100) Replacement purchase intention ¢ Purchase (%)

Early replacement better (n = 48)

Late replacement better (n = 52)

77 42.8 (12.2)

86 43.3 (13.8)

25 19 207,600(56,000) 67.0 (14.0)

27 14 199,600 (59,000) 64.3 (18.2)

67 37 29 3.0 (1.5) 60.5 (16.2) 69.3 (13.0) 8.4 (5.0) 15

29 31 8 1.7 (1.3) * 59.3 (16.9) 70.2 (12.0) 10.8 (6.3) 17

' p < 0.05. a For this variable and the following for which percentages are reported, g2-tests were performed of the difference between the groups. b For this and the following variables where means are given with SD within parentheses significance was tested by means of t-tests. c The scale is reversed so that a higher value indicates that early replacement is more environmentally friendly. d Aspiration level and current level were averaged across three scales. Cronbach's alpha was 0.89 for aspiration level, 0.84 for current level. c The measures of replacement purchase intention obtained on 7-point scales were summed across four time horizons. Averages were then computed across the strength-of-intention and probability scales. Alpha was 0.93.

ment was better for the environment. As may be seen, there were no statistically reliable differences in background characteristics. Neither did the groups differ reliably in environmental concern. The leading questions aiming at conveying (faked) information about what was better for the environment yielded in one case a surprisingly high number of yes-responses. Since this question was given to the early-replacement group it suggested higher credibility of information indicating that early replacement is better. Subjects in this group also tended to respond more favourably to the question which asked if early replacement was preferable.

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For aspiration level and current level indices were computed by averaging across the three overall ratings. No reliable differences were found. In the case of current level this was as expected. However, a difference was expected for aspiration level. For both measures of replacement purchase intentions the ratings were summed across the four time horizons. In those cases where the interviewee indicated a maximal value for a time horizon before the last and the interviewer therefore stopped, maximal values were inserted for the remaining time horizons as well. The scales thus ranged from 4 to 28. Neither the combined measures of replacement purchase intention nor actual replacement purchase yielded reliable differences between the groups.

3.2. Path analyses An absence of mean differences does not exclude the possibility that analyses of correlations will reveal the expected relationships. Furthermore, the question of whether replacement purchase intention is related to the difference between aspiration level and current level must be addressed by means of such analyses. In a first causal model subjected to test by means of path analysis using Current level

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Aspiration level

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Replacement

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Significanceof t statistics: ... p<10 p<.001

Model I Fig. 2. Models of the causal relationships between replacement purchase, replacement purchase intention, aspiration level, and current level excluding or including additional factors affecting replacement purchase intention and replacement purchase (Models I and II respectively). Standardized path coefficients are given.

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Table 3 Goodness-of-fit measures for models of the causal relationships between replacement purchase, replacement purchase intention, aspiration level, and current level excluding or including additional factors affecting replacement purchase intention and replacement purchase (Models I and II respectively). (Cf. Fig. 2)

X2 df p Adjusted Goodness-of-fit Index Root Mean Square residual

Model I

Model II

5.7 2 0.06 0.86 0.06

26.9 21 0.20 0.87 0.06

maximum-likelihood estimates in the LISREL8 program (J6reskog and S6rbom, 1993), 2 the following set of equations were fitted (Fig. 2): X 1 = bl2X2, X 2 = b 2 3 x 3 --I-b 2 4 x 4 ,

where x I denotes replacement purchase, x 2 replacement purchase intention, x 3 aspiration level, and x 4 current level. Both aspiration level and current level were hypothesized to affect replacement purchase intention which in turn was hypothesized to affect replacement purchase (Fig. 1). Fig. 2 shows that when fitting this model all path coefficients reached significance except that associated with the path from aspiration level to replacement purchase intention which was only marginally significant. An acceptable fit of the model required that a correlation was assumed to exist between aspiration level and current level. In Table 3 X 2, the Adjusted Goodness-of-fit Index, and Root Mean Square residuals are given. A second model consistent with the conceptual framework (see Fig. 1) with age of automobile, income, and environmental concern as additional independent variables was fitted. The dummy coded information manipulation and the manipulation check (timing preference) were also included (Fig. 2 3). The path coefficient for age of the automobile was nonsignificant whereas the remaining were either significant or, for environmental con2 Note that only manifest variables were included. Although several different measures were obtained for some of the critical variables, sample size precluded testing a model with latent variables. 3 A causal relation from aspiration level to current level is actually assumed in the model. However, this was only because with this model it was not possible to specify a correlation in the path analysis. Excluding the causal relation led to an unacceptable model fit, and changing its direction had a marginal effect. Also in this case the causal relation is therefore interpreted as a correlation.

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cern and income, close to being significant. The fit of the model was satisfactory (Table 3).

4. Discussion

Although many purchases of durable products are replacements, households' decisions to replace an owned durable do not seem to have attracted much research interest. A conceptual framework was proposed which specifies factors that affect the timing of replacement purchases. In this framework the replacement purchase intention is hypothesized to be related to the difference between assessments of the current quality of the owned product and an aspiration level defining a minimal quality. For a cross-sectional sample of automobile owners the results of a telephone survey were consistent with this hypothesis. In a path analysis a measure of aspiration level was positively related and a measure of the current level negatively related to the stated intention to replace the owned automobile. The intention measure was in turn positively related to the frequency of actual replacement purchases approximately 10 months after the interviews. With the aim of investigating whether knowledge about what is better for the environment, early or late replacement of the automobile, would affect purchase intention, faked information supporting either view was given to subjects who were randomly assigned to two different conditions. A significant difference in the expected direction was observed between subjects in the different conditions with respect to whether they believed early or late replacement to be better. No corresponding reliable differences however were found for aspiration level, replacement purchase intention, and replacement purchase. In the path analysis a causal relationship was indicated from the information manipulation to the aspiration level through a measure of whether or not subjects believed in the information. The aspiration level was furthermore influenced by environmental concern. Thus it appeared that only subjects who believed in the information were affected. A role may also have been played by environmental concern. Perhaps only subjects who were concerned about the environment believed in the information. However, since the path coefficient did not reach significance, caution needs to be exercised in drawing conclusions about the role of preexisting

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attitudes and knowledge. It is also conceivable that any such strong effects are counteracted by the fact that today so many people are concerned about the environment (Fransson et al., 1994). At the same time, an effect of the information manipulation was observed. Both people and experts may not in general know which is better for the environment, to replace the old automobile or to hold on to it. Therefore, as the present findings indicated, credible information may have an impact. Although the model fitted to the data implies that the information affected actual replacement purchases 10 months later, if anything this influence was very weak. Recurrent extensive information campaigns are most likely necessary to obtain strong effects. In both models which were fitted to the data there was a correlation between assessments of the current level and the aspiration level. No such correlation is hypothesized in the conceptual framework. However, in a cross-sectional sample a correlation should be expected since an implication of the conceptual framework (see Fig. 1) is that subjects with higher aspiration levels own automobiles with a higher current level and vice versa. There are of course also other possibilities such as that respondents were affected in some way by the preceding ratings of the aspiration level when they rated the current level, or that they had difficulties in performing the somewhat abstract ratings of the aspiration level without reference to the current level of the owned automobile. Although such could have been the case for some respondents, the support for the hypothesis that replacement purchase intention was related to the difference between the aspiration level and the current level nevertheless suggested that the distinction was meaningful for a majority of respondents.

Acknowledgements The study was financially supported in part by grants to the Transportation Research Unit at Ume~ University from the Swedish Transportation Research Board (#92-231-23) and from the Swedish Consumer Agency (#42/K2660), in part by graduate training grant #92522 to the first author from the Centre for Environmental Research at Ume~ University. The authors thank J6rgen Garvill, Director of the Transportation Research Unit, for valuable statistical advice, two anonymous reviewers and Carole B. Burgoyne for helpful comments.

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