CAN IT REALLY be good environmentalism to bribe people to go out and buy new cars? The cash-for-clunkers program encourages Americans to swap old, less fuel-efficient cars for new, more fuel-efficient models. One side effect of the program is that new car owners will surely find it more appealing to drive in their snazzy new cars. A better way to reduce carbon emissions is to make driving more, not less, expensive.
When gas prices spiked last year, the MBTA experienced record ridership numbers, an increase of 21 million people over 2007. Estimates suggest that when the cost of travel increases by 10 percent, car traffic decreases by 3 percent. Subsidizing more fuel-efficient cars lowers the gas used for each mile of travel, but it encourages driving and discourages public transit use, car pooling, and living at higher densities close to jobs. Can Congress ever stop supporting sprawl?
The cash-for-clunkers policy seems based on the mistaken view that the number of miles traveled is independent of the price or pleasure of driving. I call this the “lump of travel fallacy,’’ which is one of a family of lumpy errors that all assume things will stay fixed when they won’t. The lump of travel fallacy misleads leaders into thinking that billions spent on highways will eliminate congestion. Yet economists Gilles Duranton and Matthew Turner have compelling evidence that shows car travel increases essentially one-for-one with the amount of roads.
The original lump fallacy is the “lump of labor fallacy.’’ This fallacy holds that there is a fixed amount of work to be done in society, so restricting working hours will reduce unemployment. Encouraged by this logic, European polities have long restricted work hours. The history of Europe’s labor markets illustrates that more regulations makes hiring less attractive and reduces the total amount of work done in a society.
Subsidizing high-mileage cars to reduce carbon emissions is a bit like subsidizing low-calorie foods or low-tar cigarettes in order to reduce obesity or lung cancer. If the amount of cookie consumption was constant, then a lower-calorie cookie would lead to thinner waistlines. But if someone makes a less fattening, delicious cookie, I’ll want to eat plenty of them. Anyone who thinks that the proliferation of diet foods should have made Americans thinner was suffering from the “lump of food fallacy.’’
A similar “lump of smoke fallacy’’ implies that healthier cigarettes reduce lung disease. Cigarette smoking initially dropped sharply after the alarming 1952 Reader’s Digest story “Cancer by the Carton.’’ Cigarette companies responded with filtered cigarettes, which were perceived as being healthier. The reassured public began smoking more than ever; extra cigarettes eliminated any health gains that might have come from the filters.
But now the government is implementing a transportation policy, and the lump of travel fallacy seems to be on the march. We should expect more driving from someone who is induced to buy a newer, more pleasant car that is cheaper to drive. No one should be surprised when the stimulus package’s jolt to highway spending increases driving. Some leaders seem to think that subsidizing high-speed rail will offset this cash for cars, but subsidizing travel means more travel and more carbon emissions. The best way to get people to ride trains is to impose appropriate taxes on carbon and congestion charges.
If the government is desperate to subsidize something, it should focus on the greening of urban buses. With public bus lines, the number of vehicle miles can be kept constant. Better bus service in the urban core encourages high-density living. Unlike new cars or inter-urban rail lines, which transport the prosperous, buses are disproportionately used by the poor. The cash-for-clunkers policy actively reduces the supply of old cars available for lower-income buyers, but environmental policy need not be regressive.
Good policies ensure that subsequent behavioral responses work toward the policy’s aims, not against it. If America wants to fight global warming, a carbon emission tax makes more sense than car subsidies. Doling out cash for ailing car companies may be popular, but that doesn’t make it right.
Edward L. Glaeser, a professor of economics at Harvard University, is director of the Rappaport Institute for Greater Boston. 
