Here's a simple math puzzle that the vast majority of people get wrong:
Dylan decides to get rid of his Toyota Corolla, which gets 29 mpg, and buys a shiny new Prius, which gets 50 mpg.
Sarah, meanwhile, is selling her hulking Chevrolet Suburban, which gets just 12 mpg, and buying a nearly-as-hulking Cadillac Escalade, which gets 15 mpg.
Assuming they both drive the same amount each year, who just saved more gas by upgrading?
Spoiler: The answer here is actually Sarah. Moving from 12 mpg to 15 mpg is a fairly big gain for fuel consumption — for every 1,000 miles she drives, she's now using 67 gallons instead of 83 gallons. That's a 16-gallon difference.
By contrast, the upgrade from 29 mpg to 50 mpg isn't as big a leap. For every 1,000 miles Dylan drives in his new car, he's now using 20 gallons instead of 34 gallons —for a savings of 14 gallons. Obviously he's using much less gasoline overall than Sarah. The Prius is the most efficient model by far. But his upgrade wasn't as beneficial. The returns to boosting fuel economy are smaller when starting from a higher level:
Studies have found that the vast majority of people aren't aware of this. Which is why many experts think that "miles per gallon" is a somewhat misleading metric for cars and trucks.
As U.C. Berkeley's Catherine Wolfram explains in an interesting new post, this "MPG illusion" could have huge implications for the auto market. Many people who are set on buying SUVs, say, appear to underrate the fuel savings that come from buying a slightly more efficient SUV. But as the example above shows, those gains are often quite large. Here's Wolfram:
In general, MPG Illusion suggests that consumers are likely purchasing both too many gas guzzlers and too many super-efficient plug-in hybrids, and avoiding vehicles with mid-range MPG ratings more than they would if they weren’t under the MPG Illusion.
In other words, consumers are mistakenly thinking that a Suburban is not that much worse in terms of fuel consumption than an Escalade, so purchasing too many Suburbans.
For decades, most new vehicles in the United States appeared with stickers showing the "miles per gallon" that the car or light truck could get on both highway and city roads. But when it comes to fuel economy, something like "gallons per mile" is often much more informative. And that usually takes a few extra calculations to figure out.
In recent years, that's started to change. In 2008, the EPA began revising those stickers to show the expected annual fuel costs for a typical driver. (Here are the newest labels slated for model year 2013.) In theory, that should make it easier to compare different vehicles. Wolfram notes that two other academics, Christopher Knittel and Hunt Allcott, are now conducting an experiment to see if this information actually affects how people buy cars.
It might turn out that one easy way to boost fuel economy doesn't involve any new regulations or taxes at all — just a small tweak on a sticker.