The market for smoked lemons

My attention is drawn to this paper, on the asking price (not sale price, not) for used cars that have been driven by smokers or non-smokers. The difference is about 10 per cent – $700 – for a typical car:

For this car to loose $700 in KBB value, the car would have to miss all of the following standard features: air conditioning, power steering, power windows, power door locks, cruise control, and the dual front airbags.

The authors emphasise the dangers of second-hand smoke but of course there are other explanations. (If safety concerns are the main motivation for the lower selling price for smoky cars, my guess is that they are overblown.) I wonder if this result tells us more about smokers than their cars – smokers are the ones offering cheaper deals, after all.

The Undercover Economist: a guide

Publishing schedule: Excerpts from "The Undercover Economist" and "Dear Economist", Tim's weekly columns for the FT Magazine, are published on this blog on Saturday mornings.
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