Return of Cash for Clunkers

[Update June 20 2009

If you are considering a trade in, please use the tools linked here to see the cash value of your gas savings. The gas savings can be more valuable than a Cash for Clunkers voucher.

The final bill is linked to this post. The details below refer to an older bill.]

Cash for Clunkers is back thanks to Rep. Betty Sutton of Ohio. See this April 1 post for useful tables showing the gas and cost savings you would receive under the new plan; for a recap of the earlier 2009 versions, see this post. See the blog archive on the right for older and newer posts on Cash for Clunkers.

As we argued in our original post on Cash for Clunkers, encouraging someone to replace a 14 MPG car with a 25 MPG car saves 300 gallons of gas per 10,000 miles of driving, or 3 tons of carbon dioxide. There is no improvement that one can make to a 33 MPG car that will reduce carbon dioxide by the same amount. GPM makes the greenhouse gas benefits of Cash for Clunkers clear.

The Sutton Bill

Rep. Betty Sutton of Ohio has introduced a new bill that offers up to $5,000 towards purchasing a new, US-made car that gets 27 MPG (or 24 MPG for a truck or SUV), and up to $4,000 towards purchasing a Canadian or Mexican made car that gets 30 MPG. Cars assembled outside the US can be eligible but cars manufactured outside the US are not. The new car must cost $35,000 or less.

This bill requires that the trade-in car must be at least 8 years old and must be junked.

Autobloggreen reports that the payment for the new car is graduated and increases with the new cars efficiency. Details, however, are hard to come by.

Whereas the original bill focused on removing the most inefficient cars (below 18 MPG, or 5.5 gallons per 100 miles) and replacing them with efficient cars (25% better MPG than the class average, around 4 gallons per 100 miles), this bill appears to allow a car buyer to turn in any 8+ year old car as long as the new car is more efficient and above the stated minimum MPG for the class. That makes more cars eligible for the trade in. It also means that some trade ins may have only a small impact on CO2 reductions (e.g., should someone trade in a 25 MPG car for a 28 MPG car).

See also coverage at the Detroit Free Press and at Kicking Tires.

Overview of GPM - Updated

Know Your GPM

Know your gas consumption and compare it to any 2009 car here.

Overview

Here is a quick overview of what's wrong with MPG and how "Gallons per mile" (GPM) helps:

MPG tricks people's perceptions. Replacing a car that gets 14 MPG with a car that gets 17 MPG saves as much gas for a given distance as replacing a car that gets 33 MPG with a car that gets 50 MPG (about 1 gallon per hundred miles--see this table). MPG obscures the value of removing the most inefficient cars. As the GPM table shows, a 14 to 20 MPG improvement saves twice as much gas as a 33 to 50 MPG improvement:

MPG	GPHM
10	10
11	9
12.5	8
14	7
16.5	6
20	5
25	4
33	3
50	2
100	1

"Gallons per 100 miles" or "Gallons per 10,000 miles" (GPM) corrects these misperceptions. These gas consumption measures should be provided by consumer sites to supplement information about MPG. And GPM makes clear that policy should be focused on replacing the most inefficient cars. [Update July 2009: We applaud the USA Today and Popular Mechanics for adding "gallons per 100 miles" to their car reviews.]

A free link to the original Science article can be found here and a post summarizing the original Science studies can be found here.

A GPM calculator can be found here. It allows you to calculate gas consumption (and costs) for your current car and for all 2009 cars. This is a model of what the EPA and Consumer Reports should offer to fix the illusions caused by MPG. Offering a gas consumption measure (GPM) in addition to MPG is a low cost way to give consumers better information - as proposed by Representative James Sensenbrenner. It should be a bipartisan no-brainer.


As we describe below, both gas savings and CO2 reductions are a linear function of decreases in GPM; neither is a linear function of increases in MPG.

A more detailed post summarizing the basic argument for GPM can be found here. The end of this longer post explains why "going metric" doesn't solve the MPG illusion and why "percentage improvement" also leads to misperceptions.

The Math

The math is trivial. GPM is the inverse of MPG, and the relationship is curvilinear. What is not trivial is that car buyers assume that they can take a difference in MPG when comparing cars to gauge gas savings. GPM, but not MPG, operates by subtraction.

The math to compare fuel economy across cars is not trivial. It involves more than taking the simple inverse of GPM = 1/MPG. Specifically, the math requires taking some distance, X, and dividing it by two MPG figures before taking a difference: X/MPGhigh - X/MPGlow. For example, the improvements from 10 to 11 MPG, 16.5 to 20 MPG, and 33 to 50 MPG all save the same amount of gas over a given distance (e.g., 100 gallons per 10,000 miles). To measure gas savings, MPG requires division before subtraction (e.g., 10000/20 - 10000/16.5).

However, people intuitively rely on subtraction when comparing MPG, which creates illusions.

GPM, not MPG, allows car buyers to use subtraction to compare the fuel economy of different cars (e.g., 600 vs. 500 gallons per 10,000 miles). GPM makes the magnitude of gas savings clear without additional math.

Europe, Canada, and Australia use volume over distance (liters per 100 kilometers); India and Japan, like the US, use distance over volume (kilometers over liters). Kilometers per liter creates the same illusions as MPG.

Summary: The Case for GPM

Which is more useful to know: How far you can drive on a gallon of gas? Or, how much gas you will use while owning a car?

MPG answers the first question. It is useful when judging the range of one's gas tank (can I make it two more exits before a refill?). But it answers a less important question. GPM answers the question of gas consumption. We suspect that, when buying a car, most people want to know gas consumption. Gas consumption, as measured by GPM, can be directly translated to the cost of driving the car and to the amount of greenhouse gas emissions (100 gallons of gasoline = 1 ton of CO2). MPG cannot.

Differences in GPM provide a direct measure of gas savings and CO2 reductions.

Differences in MPG do not.

Providing a column of GPM numbers at Consumer Reports and at fueleconomy.gov would make accurate fuel economy comparisons far easier than the current column of MPG numbers. GPM needs to supplement MPG as a measure of fuel economy.

An Open Letter to the EPA and the Department of Energy

March 14, 2009

Administrator Lisa Jackson
Office of the Administrator
Environmental Protection Agency
Ariel Rios Building
1200 Pennsylvania Ave., NW
Washington, DC 20004

Dr. Stephen Chu
Secretary of Energy
U. S. Department of Energy
1000 Independence Ave., SW
Washington, DC 20585

Dear Administrator Jackson and Secretary Chu,

I am writing to ask you to consider adding gas consumption information to the fuel efficiency information currently provided on automobiles sold in the United States. Currently, as required by law, the EPA provides information on “miles per gallon” (MPG). However, in research published in June, 2008 in Science (Larrick and Soll, "The MPG Illusion," Science, 320 (5883) p. 1593-1594), my co-author and I showed that MPG misleads car buyers when they compare the gas savings available from different cars.

The following table shows gas consumption for vehicles with different levels of MPG over 10,000 miles of driving:

10.0 MPG = 1000 GPM (Gallons per 10,000 Miles)
11.0 MPG = 900 GPM
12.5 MPG = 800 GPM
14.0 MPG = 700 GPM
16.5 MPG = 600 GPM
20.0 MPG = 500 GPM
25.0 MPG = 400 GPM
33.0 MPG = 300 GPM
50.0 MPG = 200 GPM

Because GPM is the inverse of MPG, gas savings declines rapidly as MPG increases. Thus, the largest gas savings come from removing the most inefficient vehicles. Replacing a car that gets 14 MPG with a car that gets 25 MPG reduces gas consumption (and carbon dioxide emissions) more than any possible replacement of a 33 MPG car over the same distance. MPG obscures these savings.

The research in the Science article showed that people tend to subtract MPG when they assess the gas savings of different vehicles. This “linear” thinking creates illusions, leading people to undervalue replacing inefficient cars. Only a measure of GPM can be subtracted.

What can the EPA and the Energy Department do to help consumers? The remainder of this letter suggests possible improvements to the fueleconomy.gov website and the annual Fuel Economy Guide (http://www.fueleconomy.gov/feg/FEG2009.pdf) which are jointly run by the EPA and the Office of Energy Efficiency and Renewable Energy (EERE) of the Department of Energy.

First, there are two things that the EPA and DOE do not need to do. First, you do not need to explain the MPG Illusion to car buyers, which may not be of interest to many consumers. Second, you do not need to use the acronym “GPM,” which may strike some consumers as unnecessary.

What the EPA and EERE should consider doing is the following:

1) Emphasize clearly on the opening page of the fueleconomy.gov website (and in the Fuel Economy Guide) that consumers should compare the gas consumption of cars, not MPG. Almost all consumers will care about gas consumption. It needs no further justification.

2) Provide consumers with a salient, immediate measure of gas consumption when they examine cars. The measure could be gallons per 100 miles or gallons per 10,000 miles. It could be displayed as a column of data in the Fuel Economy Guide and could be exhibited next to MPG in the car comparison windows on the fueleconomy.gov.

Having the option of tailoring the distance to a consumer’s choice is also useful. The following Duke Calculator is a model for this type of information. It allows car buyers to calculate gas consumption for their current vehicle (calculator 1) and compare it to all new 2009 vehicles (calculators 2 and 3):

http://www.gpmcalculator.com/

The current fueleconomy.gov website provides some of this information, but only to a limited extent.

There is an option of switching to gallons per 100 miles—although no explanation is given for why consumers would want to focus on gallons per 100 miles. Because the fueleconomy.gov site never mentions the need to compare gas consumption, few consumers are likely to elect the option.

The fueleconomy.gov website automatically displays fuel consumption per 25 miles for each vehicle. However, the distance is so small that it makes all cars appear very similar in terms of gas consumption. Using a larger base—at least 100 miles, or better, 1,000 miles or 10,000 miles—makes differences in gas consumption between cars clear.

The site also automatically displays a number of annual measures that are linear proxies of gas consumption: Barrels of oil consumed, carbon footprint, and gas costs. These proxies are very useful. However, none of these are effective as a standard, memorable unit of efficiency (i.e., they are not comparable to MPG in terms of how well they "stick"): Barrels and carbon footprint are unfamiliar. Gas costs fluctuate with gas prices so memorizing listed gas costs in the year of purchase (if possible) is uninformative for later car purchase decisions. In contrast to the proxies, gas consumption is intuitive. Like MPG, a standard measure of gas consumption can be remembered and compared across cars and over time.

In sum, you will be helping consumers to make wiser decisions about gas consumption, and carbon dioxide emissions, by providing them with salient information on gas consumption. Please emphasize and make easily available information on gas consumption.

Sincerely,

Richard Larrick

larrick@duke.edu

Updated: 2:40 pm March 16