News

Given that Monday brings a Special Session and more talk of transportation and tax policy, my mind has been awash lately with musings about tax policy, our Commonwealth, and the terms of the debate. I’ve got lots of ideas, but here’s one thing that occurred to me today.
Earlier today, I drove out to the Coordinated Campaign HQ at Anderson Road while moving a desk to my office in the City of Fairfax before returning to Mt. Vernon. Coming back, I pondered the fact that this 40 mile trip actually cost me about $12 in my minivan, while if I could have used my Honda, this trip would have cost me $4.
Information Makes a Difference
The Washington Post also ran an article the other day about hybrid owners have noticed that their cars also alter how they drive on the road – this is something I’ve known for four years now. My hybrid tells me both my exact gas mileage at any second (you can watch if fluctuate by pumping the gas) and your average mileage per tank. Soon after I bought it, every day became a challenge to keep my average per tank as close to 50 MPG as possible. Very quickly you notice that when you stomp the gas, turn on the A/C, or go up a hill, your MPG plummets, ruining your average MPG.
You see, when you’re getting 50 MPG, a 10% drop = 5 MPG or 70 less miles out of a 14 gallon tank of gas – That’s real money. However, if you’re driving a car that gets 20 MPG a 10% drop in gas efficiency only saves you 2 MPG or 18 miles out of a 14 gallon tank of gas. Big deal. Who cares? Keep driving like a jerk. It doesn’t really make much difference, right?

Should Everyone Buy a Hybrid? Depends on what you drive now…
This brings me to my broader point. From a public policy point of view, our leaders ought to focus their efforts in an efficient fashion so that we get the biggest bang for our buck and so that not everyone is impacted unfairly. While we can look at changing everyone’s behavior, sometimes that’s more difficult than changing the behavior of a smaller group of people which are responsible for the bulk of the harm. Sometimes we can actually make a much bigger difference by focusing on a smaller group of people. Let me explain.
Before I bought my Civic Hybrid, I drove a Honda Accord. I was getting 31 MPG. So I went from 31 MPG to 50 MPG – a difference of 19 MPG or an increase of 66%.
Suppose I drove a 2008 Hummer H3 and got 18 MPG. Suppose I upgraded to a 2008 Honda Accord and got 31 MPG. That’s an increase of 13 MPG or an increase of 72%. What’s the big deal you ask? Let me explain.
Suppose I drive 15,000 miles per year. Here’s what that means.

Comparison of Car Upgrades
	MPG of First Car	MPG of Second Car	Difference	Proportionate Increase	Car #1 Gals. Per 15,000 Miles	Car #2 Gals. Per 15,000 Miles	Gallons Saved	Money Saved
Accord to Civic	31	50	19	61.29%	484	300	183.9	$735.48
Hummer to Accord	18	31	13	72.22%	833	484	349.5	$1,397.85
Difference	13	19	6	10.93%	349	184	165.6	$662.37

In other words, the Hummer owner saves more gallons, makes more environmental impact, and even saves more money by upgrading to an Accord than the Accord owner upgrading to the Hybrid even though the original Accord owner is saving more MPG.

Why?

Because the Hummer owner’s PROPORTIONAL increase is larger which is what really matters.
You see, in the United States, we measure everything wrong. Miles per gallon is a crappy measure. To give people a meaningful basis of making comparisons, we should not be looking at miles per gallon, we should be looking at gallons per mile, and we should probably be looking at gallons per 100 or 1,000 miles. Then people can truly understand their choices.
Check out the following from a British journal.

In The MPG Illusion, published in the US journal Science yesterday, Richard Larrick and Jack Soll at the university’s Fuqua School of Business describe how the use of miles per gallon is misleading and causes people to grossly misjudge the environmental impact of upgrading to a new car.
The two management professors stumbled across the problem while working out the true fuel efficiency of different cars in a car-sharing scheme. They found people often believed – mistakenly – that a 10mpg improvement in fuel efficiency always corresponded to the same fuel saving.
“The reality that few people appreciate is that improving fuel efficiency from 10 to 20mpg is actually a more significant saving than improving from 25mpg to 50mpg for the same distance of driving,” said Larrick. Likewise, replacing a car that does 10mpg with one that appears only slightly more efficient at 11mpg saves as much fuel as upgrading from a 33mpg car to a 50mpg car….

In a series of experiments, Larrick and Soll asked volunteers to study a series of cars whose fuel efficiencies were given in miles per gallon. When they were asked which upgrade would save the most fuel, they invariably made the wrong decision. In one test, most people believed that upgrading a car from 34mpg to 50mpg would save more petrol than replacing an 18mpg car with a 28mpg vehicle. In fact, the latter saves twice as much fuel.

“Miles per gallon is misleading and can play tricks on our intuitions,” said Soll. . . . “Changing the way we express efficiency would help the car companies make clear to buyers where there are gains to be made.” When the tests were repeated using gallons per 100 miles, the volunteers correctly picked the greenest option from those available.

What does all of this mean?
The General Assembly and Congress should pass legislation mandating the following

1 – Car efficiency be expressed in gallons per 1,000 miles.
2 – All cars should provide real time feedback as to your gas mileage.
3 – Tax incentives should focus on getting people out of gas guzzlers as opposed to simply promoting hybrid ownership.

We don’t need to pass laws banning SUV’s. When people are given proper information and feedback, they change their behavior. My experience, the Washington Post article above shows it, the above study shows it – it’s human nature. Not everyone’s brain works like a proportionality calculator. Better information is key.
Hybrid ownership is a good thing. I invested in mine in August, 2004 and I have never looked back. However, as a society, we will make the biggest difference getting the cars with the lowest mileage off the road. That is the most efficient policy. While the hybrid might be a good choice for me, it’s not the best choice for everyone.
In terms of Monday, none of this will get us more roads or rails built (in fact it would probably reduce tax revenue because people would be paying less taxes per mile driven), but it will certainly make our world better for our children. As my partner Chap Petersen points out, we need to talk about more than just building new roads, it’s time to start changing the conversation in Richmond.