Abstract
Panel data analysis is used within a fixed effect model to examine the relationship between vehicle safety ratings and fuel efficiency of 45 new vehicle models sold in the US between 2002 and 2007. While conventional wisdom and most early literature suggest that lighter, more fuel efficient vehicles are less safe to their occupants, the tests show a positive relationship between vehicle safety ratings and fuel efficiencies not only within and across most size classes but also for vehicles produced by both the USand Asian automakers. We also explore the design initiatives by manufacturers to compensate for the reductions in weight/size of fuel-efficient vehicles. (A) Reprinted with permission from Elsevier.