Regulation: Saving Gas via Underpowered Death Traps

After the Obama Administration unveiled new fuel-economy standards last week for cars, light trucks and SUVs — setting an average goal of 54.5 miles per gallon by 2025 — perennial critics of the policy pounced on one of its feared side effects.

This will take away consumer choice, warned Sterling Burnett, a senior fellow with the free-market think thank National Center for Policy Analysis, and force all but the wealthiest drivers into small, underpowered death traps.

Yes, it's true that the fuel-economy standards the U.S. has been using cost lives. Economist Mark Jacobsen has estimated that for every mile-per-gallon we raise the standards, 149 traffic fatalities occur per year. That would mean 1,490 deaths if the standards were raised from, say, 30 miles-per-gallon to 40. But this doesn't have to be the case. It's possible, Jacobsen has concluded, to increase fuel efficiency without also decreasing safety.

The fuel economy standards we've been using actually make [large differences in the sizes of vehicles] worse. The government deploys a separate, higher standard for cars than for light trucks and SUVs. And this essentially encourages carmakers to make small cars even smaller — without doing the same to trucks and SUVs and without providing any incentive for drivers to downsize from an SUV into a car.

Jacobsen's solution: one average fuel economy standard for all light vehicles (which is how the EPA now regulates auto emissions). Combining what engineers have learned about vehicle safety with what economists have studied about the auto arms race, Jacobsen's model produces a startling result. Separate standards for cars and trucks lead to deadly accidents; a single standard for all vehicles would lead to almost none.

For more, see Saving Gas via Underpowered Death Traps by Emily Badger, August 5, 2011 at Miller-McCune.