In the weeks before the billion dollar “Cash For Clunkers” bill passed into law, we heard a lot of complaining about its anemic watered-downness.
It wasn’t big enough! The rules were inconsistent and weird! The government is paying hundreds of thousands of people who would have traded in their cars anyway to hold out until late July, all for a paltry 50,000-or-so net increase in auto sales!
Well, the Detroit Free-Press and the New York Daily News both report today that customers are swarming dealerships, and Jalopnik today tells us “variations” on the bill’s name — cash 4 clunkerzz, and such– have catapulted the bill onto the Google Trends list of fastest-accelerating web memes.
But today even hardened C4C-sceptic Jalopnik associate editor Matt Hardigree tells us he was surprised to notice in his blog’s running clunker photo gallery that readers of his site were trading in cars with Blue Book values significantly higher than the $4,500 trade-in offered under the terms of the bill.
Of particular interest was this 1989 Toyota Land Cruiser with 77,000 miles. Hardigree estimates its regular trade-in value at $5,500, making the economic cost of participating in the program $1,000, plus the emotional toll of destroying a perfectly good car when one is a car lover.
(Hardigree says he has gotten numerous emails from car dealerships overjoyed by the new business but invariably traumatized by the experience of wrecking perfectly driveable cars.)
But if people are trading in good low-mileage cars they might otherwise have kept driving out of some patriotic-environmental concerns, and buzz around the program is still gaining momentum, there are clearly some behavioural economic forces at work here that could make Cash For Clunkers even more successful than lawmakers had hoped.
Now if only we could say the same for the whole mortgage modification thing.
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