Young people are all for saving the environment--as long as doing so makes economic sense, according to new research conducted at Michigan State University.

Based on a survey of 18- to 30-year-olds, researchers from MSU's Eli Broad Graduate School of Management found that young consumers will not pay a premium price for an automobile simply because it is environmentally friendly. Instead, the determining factor – by far – is fuel efficiency.

The findings reveal an eco-savvy generation that has grown up and is coming to grips with the economic reality of paying bills.

"Generation Y is aging, and the stereotypical assumption that they are a spoiled generation of pierced, tattooed outcasts couldn't be further from the truth," said Clay Voorhees, MSU assistant professor of marketing. "They're maturing into a pragmatic generation that wants to do the right thing for the environment but also has real economic concerns."

MSU and Deloitte, a New York-based marketing and accounting firm, teamed to study the attitudes toward the auto industry of Gen Y – at 75 million strong, the largest generation since the baby boomers. MSU also launched an in-depth investigation into Gen Y's view of sustainability as it relates to the industry.

According to the sustainability study, young consumers will pay only $1,500 extra for a $20,000 automobile simply because it is a hybrid and considered environmentally friendly. But those same consumers will pay an additional $8,000 for a vehicle that gets 15 extra miles per gallon – regardless of whether it's a hybrid.

"It's all about economic motivation," Voorhees said. "While people want to do the right thing – they want to save the world, particularly Gen Y – they need an extra incentive on top of the motivation of owning a car that produces less emissions."

"We've grown up with a green mindset but we haven't really had to pay for it. Think about curbside recycling and free social networks," said Vanisacker, 26, a graduate student who contributed to the project. "As a generation we've come to expect more for less."

The team says auto manufacturers need to do a better job of educating consumers on the financial benefits of owning eco-friendly vehicles, which typically cost more than combustion-engine vehicles but theoretically pay for themselves over time.

"Why put the burden on a Gen Y customer to walk in the showroom and figure out how many miles they have to drive this Ford Fusion before they break even?" he said. "Automotive manufacturers need to make the investment in education to assist consumers in understanding how these technologies work and how they will ultimately help the environment and save them money."