JohnnyG Posted March 18, 2009 Report Share Posted March 18, 2009 This topic may need to be moved, but I felt it was worth posting. This came from my Cadillac dealer in Columbus, I had a hard time with it at first, but after thinking about it, it made a lot of sense. Posted here without permission. Article from Germain Cadillac of Dublin eNewsletter Page 1 of 2 Article from Germain Cadillac of Dublin eNewsletter (http://www.imakenews.com/germaincadillac/e_article001346646.cfm? x=bfhqqq8,b9vrjw9r) February 13, 2009 Fuel Economy Economics: Gallons-Per-Mile or Miles-Per-Gallon? Figure out how much gas a vehicle uses rather than how many miles it gets per gallon. Inspired by debates they had while carpooling in a hybrid car, Duke University researchers Richard Larrick and Jack Soll ran a series of experiments showing that the current standard, miles per gallon or mpg, leads consumers to believe that fuel consumption is reduced at an even rate as efficiency improves. People presented with a series of car choices in which fuel efficiency was defined in miles per gallon were not able to easily identify the choice that would result in the greatest gains in fuel efficiency. Posting a vehicle's fuel efficiency in "gallons per mile" rather than "miles per gallon" would help consumers make better decisions about car purchases and environmental impact, say professors from Duke University's Fuqua School of Business in a report published last year in Science magazine. Larrick and Soll's research was funded by Duke University. Miles-per-gallon always tells you which car is most efficient, but mpg isn’t the best yardstick when you are comparing mileage improvements in vehicles with different fuel efficiencies. The tendency is to undervalue small mpg improvements for a relatively inefficient vehicle and overvalue small mpg improvements for efficient cars. Larrick and Soll dubbed this effect the “MPG Illusion.” For example, in the Larrick/Soll study, most people ranked an improvement from 34 to 50 mpg as saving more gas over 10,000 miles than an improvement from 18 to 28 mpg, even though the latter saves twice as much gas. (Going from 34 to 50 mpg saves 94 gallons, but going from 18 to 28 mpg saves 198 gallons.) However, the same participants got it right when they used fuel efficiency expressed in gallons used per 100 miles rather than mpg. Viewed this way, 18 mpg becomes 5.5 gallons per 100 miles, and 28 mpg is 3.6 gallons per 100 miles. The following chart shows why gallons-consumed-per-100-miles-driven makes evaluations easier. Miles Per Gallon Gallons Consumed per 100 Miles Driven Gallons Consumed per 10,000 Miles Driven Article from Germain Cadillac of Dublin eNewsletter Page 2 of 2 Edmunds.com reviewed the Duke study and came up with the following illustration. Imagine three cars lined up side-by-side. They all drive 100 miles. Since each car has a different fuel economy rating, they each burn different amounts of gas to travel that same distance. 12.5 mpg = 8 gallons per 100 miles 25 mpg = 4 gallons per 100 miles 50 mpg = 2 gallons per 100 miles Now look at how much gas is saved in each case. Over a 100-mile drive, the 25-mpg car saves four gallons over the 12.5-mpg car. However, over the same distance, the 50-mpg car saves only two gallons over the 25-mpg car. Taken to the extreme, if there was such a thing as a commercially available 100-mpg car, it would only save one gallon of gas over the 50-mpg car. "The reality that few people appreciate is that improving fuel efficiency from 10 to 20 mpg is actually a more significant savings than improving from 25 to 50 mpg for the same distance of driving," Larrick said. Soll noted that replacing a large vehicle that gets 10 mpg with one that gets 20 mpg reduces gas use per 100 miles from 10 gallons to five, a five-gallon savings. Replacing a small vehicle that gets 25 mpg with one that gets 50 mpg reduces gas use per 100 miles from four gallons to two, a saving of only two gallons. "Miles per gallon is misleading and can play tricks on our intuitions," Soll said. "For families and other owners of more than one type of vehicle, the greatest fuel savings often comes from improving the efficiency of the less efficient car," Soll added. "When fuel efficiency is expressed as gallons per 100 miles, it becomes clear which combination of cars will save a family the most gas.” What can you take away from these insights? Here are some good points: -Trading in a gas-guzzler for a midsize sedan provides substantial savings. -Fuel-economy improvements from 12 to 20 mpg are significant. -Once vehicles get over 25 mpg, the gains are much less dramatic. -While extremely high-mileage hybrids provide a variety of environmentally friendly benefits, they don't save much more gas than newer midsize sedans. If you want to save money, sell or trade-in your most inefficient vehicle, especially if it is in the sub-20 mpg category. If you replace it with a new model in the same class and that new vehicle offers just a few mpg in better fuel efficiency, you’ll be purchasing far less gas. THAT saves real money. Published by Germain Cadillac of Dublin Never underestimate the amount of a persons greed. Link to comment Share on other sites More sharing options...
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