Cash 4 Clunkers: Now, for the Unintended Consequences

Funny how the Cash for Clunkers (C4C) program snuck up on me this summer. I must not have been watching the inside the beltway politics closely enough to see how this $2.8 billion program gained momentum. Now, the chickens are coming home to roost.

William Jeanes, the auto editor at, has an excellent summary of the “morning after” regrets from this program, including buyer’s remorse (about 17 percent), the addition to consumer debt (which was already dampening consumer spending), and the ethics of an effective wealth transfer from general taxpayers to the 700,000 new car buyers.

Jeanes also notes that, while average gas mileage per vehicle increased 16.3 to 23.8, most people are likely to put more miles (about 4,000 on average) on the new, more fuel efficient car. Jeanes suggests this will wipe out the benefits of weaning us off gasoline. (I’m a bit more skeptical since we need to look at household driving, not miles put on one car in a two-car household. For example, our household shifted more miles to our Prius from the minivan when we bought the car in 2003, but our household VMT did not increase.)

Nevertheless, research from the University of Michigan suggests the impact on actual fuel economy will be modest. According to the abstract from a September 2009 report by Michael Sivak,

“This study evaluated the effects of the U.S vehicle-scrappage program (“Cash for
Clunkers”) on the average fuel economy of new vehicles purchased in July and August
2009. The predicted, baseline fuel economy, without the existence of the program, was
derived using a model obtained from a regression analysis performed on the data from
October 2007 through June 2009. The regression used the unemployment rate and the
price of gasoline as the predictors of the fuel economy. The results indicate that the
program improved the average fuel economy of all vehicles purchased by 0.6 mpg in July
2009 and 0.7 mpg in August 2009.”

Not very impressive.

This is not to say that the C4C program had no benefits. On the contrary, the original idea behind this program was to take older, more polluting cars off the road. The goal was improving environmental air quality, not stimulating the economy, saving the automobile industry, reducing our dependence on foreign oil, or, for that matter, reducing carbon emissions.

As environmental policy consultant Joel Schwartz has repeatedly emphasized, improvements in vehicle technology and fleet turnover–the “greening” of the vehicle fleet–has been and will continue to be the most important contributor to improving air quality. (See also Joel’s highly readable essay here.)

The C4C program was a success when measured by this metric, although it’s not clear it was cost effective.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.

Staley is the author of several books, most recently co-authoring Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century (Rowman & Littlefield, 2008). Texas Gov. Rick Perry aid Staley and Moore "get it right" and world bank urban planner Alain Bartaud called it "a must read for urban managers of large cities in the United States and around the world."

He is also co-author, with Ted Balaker, of The Road More Traveled: Why The Congestion Crisis Matters More Than You Think, and What We Can Do About It (Rowman and Littlefield, September, 2006). Author Joel Kotkin said, "The Road More Traveled should be required reading not only for planners and their students, but anyone who loves cities and wants them to thrive as real places, not merely as museums, in the 21st Century." Former U.S. Secretary of Transportation Mary Peters said, "Balaker and Staley clearly debunk the myth that there is nothing we can do about congestion."

Staley's previous book, Smarter Growth: Market-based Strategies for Land-use Planning in the 21st Century (Greenwood Press, 2001), was called the "most thorough challenge yet to regional land-use plans" by Planning magazine.

In addition to these books, he is the author of Drug Policy and the Decline of American Cities (Transaction Publishers, 1992) and Planning Rules and Urban Economic Performance: The Case of Hong Kong (Chinese University Press, 1994).

His more than 100 professional articles, studies, and reports have appeared in publications such as The Wall Street Journal, The New York Times, Washington Post, Los Angeles Times, Investor's Business Daily, Journal of the American Planning Association, Planning magazine, Reason magazine, National Review and many others.

Staley's approach to urban development, transportation and public policy blends more than 20 years of experience as an economic development consultant, academic researcher, urban policy analyst, and community leader.

Staley is a former chair for his local planning board in his hometown of Bellbrook, Ohio. He is also a former member of its Board of Zoning Appeals and Property Review Commission, vice chair of his local park district's open space master plan committee, and chair of its Charter Review Commission.

Staley received his B.A. in Economics and Public Policy from Colby College, M.S. in Social and Applied Economics from Wright State University, and Ph.D. in Public Administration, with concentrations in urban planning and public finance from Ohio State University.