Cash for Clunkers gets Traded in

It looks like Cash for Clunkers (the refreshingly legible name for what's officially the "Car Allowance Rebate System" or CARS -- funny how the media sobriquet overwhelmed the stolid, uncatchyily contrived government acronym) is on its last legs. Dealers are under instructions to stop making deals next week. This also puts to rest my chief concern -- that the program would be so popular it becomes an entitlement. That is of course what happened in Germany, where their rebate program metastasized into a sacred right to government subsidized new cars. If you ask me, auto ownership should not be part of the social contract.

So it's time to do a bit of wrap-up analysis. The Associated Press reported Tuesday on the program's progress. 358,851 vehicles, mostly pickup trucks and sport utility vehicles, were traded in (that's worth about $1.6 billion, so the second half of the program's $3 billion hasn't been accounted yet).
The top ten vehicles purchased on a Clunker trade-in:
1. Toyota Corolla
2. Honda Civic
3. Ford Focus
4. Toyota Camry
5. Toyota Prius
6. Hyundai Elantra
7. Ford Escape (front-wheel-drive)
8. Honda Fit
9. Nissan Versa
10. Honda CR-V (four-wheel-drive)

I think this is proof the program had its desired effect: SUVs and Pickups out, compacts in. Yeah, the Escape is biggish, but it gets good mileage. Ditto the CR-V. They say this is augmenting the recession austerity and high gas prices as a means of raising national fuel economy.

Perhaps an unintended side benefit: pulling half a million old light trucks off the road will shift significantly the crash-worthyness of the American vehicle fleet. It's not sufficiently acknowledged that SUVs keep their occupants safe at the expense of others -- sure, you survive, but that high bumper on your Escalade will hit a sedan driver at high in the torso -- and a pedestrian at mid-thigh. Collisions are an applied science, so it's complicated, but basically, a pedestrian hit below the knee will be thrown onto the hood -- and probably survive with minor injury. A pedestrian hit above the knee will be shoved to the ground very hard, and then run over -- lethal. A shift to low-bumper, light-weight vehicles will result in fewer pedestrian deaths, and these new mini-cars are much less lethal to occupants of other vehicles.

I don't know how safe the occupants of of the new vehicles will be. On the one hand, new cars are safer than older ones (better belts and airbags, traction control and ABS, not to mention better seats and safety cages), but on the other hand, they are smaller, and so suffer more in a given collision.

Vehicle size as a safety feature is an example of the Prisoner's dilemma. Everyone is safer (and saves more money) driving small, low cars. But any one person can defect, buy a big, high SUV, and survive by murdering their fellow drivers. Selfishness makes each of us defect, so we all do. The result is everyone paying more to drive bigger cars, which are inherently more dangerous -- more momentum, higher center of gravity, higher bumpers.
First Player
CAR SUV
2nd CAR 2,2 3,0
Player SUV 0,3 1,1

Each player wants to get 3, and so trades 2 for 1. The government subsidy for fuel efficiency (and thus for small cars) changed the utility levels:
First Player
CAR SUV
2nd CAR 4,4 3,0
Player SUV 0,3 1,1
Obviously, these numbers are notional rather than literal (there are other values besides safety and cost, and individuals weigh the hedonic balance differently), but in this example (as in real life), the subsidy has the effect of changing the game -- people prefer SUVs by less than $4500, so that much subsidy moves almost everyone into cars.