I’ve received several emails pointing out that my “Prius vs SUV” analysis (below this article) is flawed, because it ignores important factors. Although I completely agree, my response was this: vehicle miles per gallon is an oversimplified measure of efficiency; passenger miles per gallon is less oversimplified. In other words, the latter is also imperfect, but one step closer to objectivity.
To illustrate why “pmpg” is still highly flawed as an efficiency measure, I thought up a little brain teaser; here goes...
You are interviewing for the position of Supreme U.S. Government Official in Charge of Evaluating Which Economic Activities are Saving the Planet (...and, by extension, which ones are not). Your interview ends with the following story problem that you must solve, in order to establish a basis for federal tax credits or penalties related to the economic activities in question. Here’s your story problem:
Six semi tractor trailer rigs, A through F, drove in a convoy from Chicago to Miami. Each had one driver only (no passengers). Each carried a load of 25,000 pounds. Each consumed exactly 500 gallons of fuel to make the trip.
Here’s your assignment: Rank the six tractor-trailer rigs, from best to worst on the saving-the-planet scale.
Whoops, sorry; I left something out. I forgot to tell you what each was carrying, and that’s pretty important—so read the following before you make up your mind:
Rig A: 25,000 pounds of seawater desalination equipment.
Rig B: 25,000 pounds of cigarettes (Marlboro Ultra Lights).
Rig C: 25,000 pounds of cigarettes (Maui Wowie).
Rig D: 12,500 pounds of bone-in ribeye steaks, 12,500 pounds of baby formula.
Rig E: 25,000 pounds of hurricane disaster relief supplies.
Rig F: 25,000 pounds of state-of-the-art, hanging-chad-proof election ballots.
Okay, now you have all the information. Rank the six tractor-trailer rigs, from best to worst on the saving-the-planet scale. Our current and future tax receipts depend on your decision.
------------------------
Post mortem:
Unsurprisingly, that story problem has no correct answer. However, it does have a moral: The imperfect government planners—operating on the principle “We know what’s best for everybody”—will screw up the valuation of all six of those cargoes. Guaranteed. On the other hand, the imperfect market—operating on the principle “one dollar one vote”—would do a far better job of valuing them.
Said a different way: The government should not be picking winners and losers. A tax credit for a Toyota Prius is a crock. A gas guzzler penalty is a crock. The market price mechanism will reallocate resources far more effectively than government planners. I bet the rising price of gasoline has already driven SUV passenger-miles-per-gallon and cargo-value-per-mile upwards, and started the owners of those vehicles thinking slightly differently about the tradeoffs among operating cost, safety, and utility. And I trust them, in the aggregate, to make the correct decision.
Whoops, sorry, I gotta run. A huge SUV just pulled up in front of our house. It's one of those Lincoln Navigators, I think. (We’re going to see a movie with the two other couples in that vehicle. Do you think I should suggest Al Gore’s movie, “An Inconvenient Truth”?)
