In the current issue of Business Week, there is an article ("Can't Stop Guzzling," pp. 26-29) that discusses how little our demand for gas appears to have been affected by the recent high prices. It's an interesting article, and an interesting issue: determining a demand curve for a product. Apparently this one is pretty inelastic -- but for prices up to how much per gallon?
Relevance to actuarial science: underlying auto insurance exposure should be some function of, among other things, amount driven, and how we drive. Are these being affected by changing gas prices?
- Rick
No comments:
Post a Comment