If I divide the $3 billion cost by the 690,000 vehicles scrapped in the program I get $4400.
Can you direct me to Edmunds’ math?
I said “per additional”. Most of the purchasers were already going to buy a car.
“This summer’s so-called Cash for Clunkers program cost taxpayers $24,000 per vehicle sold, according to an analysis by Edmunds.com.
Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as the Car Allowance Rebate System (CARS), but Edmunds.com analysts indicate that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway.
Analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle sold. The average transaction price in August was $26,915 minus an average cash rebate of $1,667.”
http://freakonomics.com/2009/11/02/lots-of-cash-for-clunkers/
(Lots of) Cash for Clunkers
FREAKONOMICS
11/02/2009 | 10:27 am PRINT
SHARE
Edmunds.com reports that its statistical analysis of the Cash for Clunkers program finds that the program generated only 125,000 extra new vehicle sales, meaning that the cost to the U.S. government was $24,000 for each of those new cars.
The reason the cost per incremental car is so high is that, according to Edmunds.com’s modeling, 82 percent of the vehicles purchased under the program would have been bought this year anyway, even without the subsidy. So Cash for Clunkers mostly just turned out to be a gift from the government to people who happened to be in the market for a new car at the right time. The auto manufacturers and dealers did not end up getting a very big chunk of the money ultimately, although they did get paid earlier rather than later in the year.
Is this surprising? Not to an economist. It is relatively easy to move around the timing of when someone purchases a durable good, but much harder to affect whether they buy a durable good or not.