Tuesday, June 24, 2008

A Distinctive Substitution Effect: High Rents Cause Los Angeles Residents to Live in Their Cars

Substitution Effects and Homelessness

In other news, some Duke Univ. Researchers have decided to teach us about hyperbolas.
Apparently, Gallons of gas consumed = miles*(gallons per mile)

June 24, 2008
Observatory
M.P.G. Can Mislead When Searching for Fuel Efficiency
By HENRY FOUNTAIN

In an era of climate change and expensive gasoline, a vehicle’s fuel efficiency, measured in miles per gallon, is an increasingly important factor to consider when shopping for a car.

But two Duke University business school professors say m.p.g. is a flawed measure and leads to a fundamental misconception about efficiency. They say the United States should do what some other countries do, which is rate cars by amount of fuel consumed for a given distance, gallons per 100 miles, for example.

The problem, Richard P. Larrick and Jack B. Soll write in Science, is that people perceive that fuel consumption falls in a linear fashion as m.p.g. increases. Surveys by the professors of college students found the perception that trading in a car that registers, say, 34 m.p.g. for one with 50 produces a greater savings than swapping an 18 m.p.g. vehicle for a 28 m.p.g. model.

In fact, the researchers say, the relationship between consumption and m.p.g. is curvilinear, and there is a greater savings at lower m.p.g.’s. Over 10,000 miles, the 28 m.p.g. car uses 198 fewer gallons than the 18 m.p.g., more than double the savings of the 50 m.p.g. car compared with the 34 m.p.g. one.

With this new measure, the researchers suggest, consumers would more easily see the value of swapping an inefficient car for one that is even just modestly more efficient.

2 comments :

MattYoung said...

Got it, in economics put the valuable resource unit on the top of the ratio.

Anonymous said...

Law of decreasing returns. After you pick all the low hanging fruit, the next envrironmental gains will be harder and more expensive.

RH