Many excellent articles have been written demonstrating the nonsense of the cash for clunkers program, so I do not want to reiterate those points here. I would like to ask a simple question. Who is going to be held responsible for the increase in automobile deaths and injuries that might result from such a program?
You might be asking what the heck am I talking about? Well, there are two reasons why one might expect to see an increase in automobile injuries and fatalities as a direct result of the cash for clunkers program – one fairly obvious, the other less so.
First, there are reports that a good many of the cars being traded in were cars like the Ford F-150 and the Jeep Grand Cherokee. Popular replacement models are the Ford Focus and Toyota Corolla. The smaller cars are very likely to be less safe than the bigger cars. If you like utilitarian calculus (I do not), then how come I never see these health costs included in the benefit-cost calculus of programs like cash for clunkers? Is it because people dying in cars would be viewed as a positive for the environment? In other words, if all cash-for-clunkers customers directly replace all of their old driving with the new cars, then we are likely to see an increase in highway mortality and injury – already among the most costly American health problems.
Second, it is not entirely clear that customers will substitute one-for-one their new cars for their old ones. Since the new models (by law) get better gas mileage, and some considerably more, the marginal cost of driving (ignoring the first effect above) has declined, substantially so for some. In other words, if it becomes cheaper to drive, then customers are more likely to drive or to change their behavior in other ways to reflect this change. Ignore the environmental “problem” with this – focus on the health aspect. Even if these cars were all equally as safe as the ones they are replacing – more miles driven and more time on the road means more death and injury in automobile accidents. But these cars will be less safe – so more driving of even less safe cars.
I have seen very little written about these costs – certainly nothing from the Administration acknowledging it. Is it not possible that these increased costs outweigh the environmental benefits gained from more fuel efficient cars? Who will be held responsible for these deaths and injuries? Will they ever get reported on?
Update: It is POSSIBLE that the general equilibrium effects are muted. After all, more Honda Civics will be crashing into more Honda Civics, there will be fewer Cherokees on the road, so they become safer too.