Wednesday, September 30, 2009

DOE Report on Improving Fuel Economy Decisions

The Department of Energy has a comprehensive August 2009 draft report available for the public entitled:

Reducing Oil Use and CO2 Emissions by Informing Consumers’ Fuel Economy Decisions: The Role for Clean Cities
A Discussion Paper for Clean Cities Coalitions and Stakeholders to Develop Strategies for the Future

The authors describe the fact that consumers are confused about the relationship between fuel economy (miles per gallon) and fuel consumption (gallons per mile), which leads to inaccurate assessments of the value of fuel economy.

Later in the report (pages 15-16), they note that

Another apparent source of confusion is a consequence of reporting fuel economy in miles per gallon rather than fuel consumption in gallons per 100 miles. Research has shown that many consumers perceive the value of an increase in 10 MPG from 40 to 50 MPG to be equal to a 10 MPG increase from 20 to 30 MPG. In fact, the increase from 40 to 50 MPG reduces fuel consumption by 0.50 gallons per 100 miles while an increase from 20 to 30 reduces fuel consumption by 1.67 gallons per 100 miles. For a vehicle traveling 10,000 miles and gasoline at $2.50 per gallon, the difference in annual fuel savings is almost $300. The website provides the option to view fuel economy estimates in terms of miles per gallon, gallons per 100 miles or liters per 100 kilometers. However, this facility is little used by visitors to the website. Additional market research may lead to better strategies for helping consumers understand this important distinction.
We agree that consumers will generally not select "gallons per 100 miles" on their own--although some may have heard about the problems with MPG comparisons, the vast majority have not.

That's why in an earlier post we recommended the following for the website and the Fuel Economy Guide run by the EPA, DOE, and EERE:

First, there are two things that the EPA and DOE do not need to do. First, you do not need to explain the MPG Illusion to car buyers, which may not be of interest to many consumers. Second, you do not need to use the acronym “GPM,” which may strike some consumers as unnecessary.

What the EPA and EERE should consider doing is the following:

1) Emphasize clearly on the opening page of the website (and in the Fuel Economy Guide) that consumers should compare the gas consumption of cars, not MPG. Almost all consumers will care about gas consumption. It needs no further justification.

2) Provide consumers with a salient, immediate measure of gas consumption when they examine cars. The measure could be gallons per 100 miles or gallons per 10,000 miles. It could be displayed as a column of data in the Fuel Economy Guide and could be exhibited next to MPG in the car comparison windows on the
Both USA Today and Popular Mechanics have started using the "gallons per 100 miles" measure.

Currently offers a "gallons per 25 miles" measure automatically (see below).

The logic for choosing this distance is that it is a typical daily drive. Jack Soll and Dan Feiler have pointed out that this number may be useful for daily driving decisions (whether to make a trip or not). The problem with this measure, however, is at the time of the car purchase decision. It makes all gas consumption numbers look small and similar (.5 vs .64 vs 1.04). At the time of a car purchase, a longer distance is more realistic and makes differences between cars clearer.

In other research, my coauthors and I have shown that expanded scales lead consumers to use that dimension more in their decision. The more expanded the scale the more weight people give it in their decision making. In this case, gallons per 25 miles is a contracted scale and gallons per 100 miles (or gallons per 10,000 miles) is expanded. For example, the numbers in the screenshot above translate to:


We think that car buyers would be served best by gallons per 10,000 miles. This could be listed at, on car stickers, in Consumer Reports, etc. Offering gallons per 10,000 miles during the car purchase decision would:

1) give buyers a more accurate understanding of fuel savings (compared to MPG) and

2) make buyers more sensitive to the benefits of fuel savings (compared to gallons per 25 miles).