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...
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