What Grade Will Your Car Get?
The EPA yesterday proposed changing the mileage rating stickers that come on every new cars. One option would include a letter grade assigned by EPA and the Department of Transportation for the fuel economy of the car.
EPA and DOT are proposing two new label designs for comment. One label design prominently features a letter grade to communicate the vehicle’s overall fuel economy and greenhouse gas emissions performance. The new design will also provide consumers with an estimate of the expected fuel cost savings over five years compared to an average gasoline-powered vehicle of the same model year.
The proposed regulation, if finalized, (and you can comment here) would be a prominent example of the Obama Administration’s philosophy of using information in the place of stricter regulation. This philosophy was captured in this memo by Cass Sunstein. The basic idea is that if you inform people in a straightforward manner about the consequences of their choices, then you increase the chance they will make decisions in a way that improves their welfare. This is seen as less coercive than restricting their choices. These labels will hopefully prove this point by reducing fuel consumption and greenhouse gas emissions without imposing huge costs.
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