Time for a pop quiz. Which of these trades saves more gas:
A) Swapping a car that gets 25 miles per gallon (MPG) for one that gets 50 MPG, or
B) Replacing a car that gets 10 MPG with one that gets 15 MPG.
If you said that A conserves more gas, you’re mistaken. And it’s not even close.
Here’s why: In the first scenario, the old vehicle getting 25 MPG uses four gallons of gas to travel 100 miles, while the new one at 50 MPG uses two. In the second scenario, the vehicle getting 10 MPG needs 10 gallons to traverse those 100 miles, while the one at 15 MPG uses 6.7, saving 3.3 gallons — fully 65 percent more than in scenario A.
If you answered wrong, don’t be too hard on yourself. You’ve succumbed to the MPG Illusion, a widespread fallacy that can easily distort perceptions of a car’s efficiency and muddle debates about transportation and climate policy.
Providing the basis for federal fuel economy rules, MPG is a foundational automotive metric in the US. “Americans are very familiar with MPG,” Richard Larrick, a professor at Duke University’s Fuqua School of Business, told me. “But I think that familiarity means that we don’t recognize what it’s not answering, which is the question of how much gas we’re using.”
Larrick co-authored a 2008 paper in Science that illuminated Americans’ “systematic misperception” of fuel efficiency when viewed through MPG. The researchers asked 77 college students questions similar to the pop quiz above. Most undervalued the benefits of rising from 18 to 28 MPG relative to going from 34 to 50 MPG.
“We think of gas savings as a kind of linear relationship with MPG,” Larrick told me. But “there are diminishing returns from MPG [improvements].” Because of the MPG Illusion, many people underestimate the benefit of addressing bona fide gas guzzlers. They give disproportionate attention to squeezing a few more MPG from models that are already comparatively efficient.
In a subsequent 2015 paper, Larrick and two co-authors offered a solution: Flip MPG and turn it into “GPHM,” or gallons of gas per 100 miles of travel. Such a metric would help consumers see how much more (or less) gas they would buy if they opt for a particular model. It could also nudge public officials striving to reduce oil consumption and tailpipe emissions to focus on the low-hanging fruit: improving the most abysmally inefficient vehicles.
The MPG Illusion sheds light on a host of policy issues
The European Union already does this, measuring fuel economy in liters per 100 kilometers driven. “They do it that way because fuel consumed per mile is directly related to energy use and directly related to emissions, whereas our MPG is not,” said Kate Whitefoot, an associate professor of engineering and public policy at Carnegie Mellon.
The US remains wedded to MPG, although the 2008 Science paper drew a flurry of attention (in part because it was published at a time when the price of gas was surging to $4.05/gallon, equivalent to around $5.80 today). A few years later, the MPG Illusion seemed to catch the eye of federal regulators revising the fuel efficiency stickers affixed to new cars at dealerships. Since 2013, those stickers have included measures of gallons per 100 miles as well as an estimated annual gasoline cost (albeit in a much smaller font than the familiar MPG figure towering above). But Larrick said that climate and consumer groups have paid scant attention to his proposed “GPHM” metric, and it does not seem to have penetrated public awareness.
Worse, the MPG Illusion can lead climate advocates to misallocate political capital, downplaying the most effective opportunities to reduce emissions from transportation, the US’s single largest source of greenhouse gas emissions.
The Corporate Average Fuel Economy (CAFE) standards, the federal policy that sets automobile fuel efficiency rules, have always been based on MPG, a big reason why the metric is so ingrained in popular consciousness. CAFE establishes one fuel economy standard for “passenger cars” (sedans and station wagons) and a second, more lenient one for “light trucks” (primarily SUVs and pickups).
The MPG Illusion helps conceal the distortions of that bifurcated structure, known as the “light truck loophole”: It reduces pressure on carmakers to improve their most inefficient SUVs, like the 2023 Chevrolet Suburban that gets a puny 16 MPG. A similar problem exists for the federal Gas Guzzler Tax, a levy that can add thousands of dollars to the cost of vehicles getting less than 22.5 MPG. Yet nonsensically, the Gas Guzzler Tax applies only to passenger cars, omitting the SUVs and trucks that now comprise more than 80 percent of the US auto market.
Another lesson of the MPG Illusion: It’s better to build hybrid versions of the most gas-thirsty cars, rather than of those that are already relatively efficient. A gas-powered 2023 Hyundai Elantra, for instance, gets 37 MPG while a hybrid model gets 50 MPG. Impressive though that sounds, an equivalent 13 MPG improvement for a hybrid version of the three-ton, all-gas Cadillac Escalade which gets a measly 16 MPG, would allow the hybrid Escalade to save four times more gasoline than the Elantra, compared to their all-gas versions. (No hybrid Escalade has been available since 2013.)
Purely electric car models are still more climate-friendly than hybrids, but US consumers have shown queasiness about going all-electric, and there is a solid argument that a given number of lithium-ion cells can more efficiently reduce emissions if they are deployed across numerous hybrid vehicles than in a single all-electric one. That being the case, publicly dragging a company like Toyota for prioritizing hybrids over all-electric models, as environmental groups like the Sierra Club have done, risks making the perfect the enemy of the good.
One of the most powerful insights of the MPG illusion is the power of simply removing gas-guzzling cars already on the road, rather than solely focusing on making new cars ever more efficient. Many vehicles manufactured in the 1980s and 1990s got significantly worse gas mileage than current versions. A 1995 GMC Yukon, for instance, gets an estimated 12 MPG, while a 2024 Yukon reaches 17 — not much to brag about, but still a 42 percent improvement. Millions of decades-old models are still in use; last year, the average age of an American car hit 12.5 years, an all-time high.
Such disparities provide a compelling argument for “cash for clunkers” initiatives like the 2009 Car Allowance Rebate System (CARS), a program that offered Americans up to $4,500 off a new vehicle if they traded in an older, still drivable one that got 18 MPG or less. (Even better: A 2020 Lithuanian program offered those surrendering an old car up to €1,000 toward far more sustainable transportation modes like e-bikes, bikes, or public transit.)
The US ended its federal program in 2009, but states including California and Colorado maintain their own. Due to the resources required to produce a new vehicle, it makes sense to limit cash-for-clunkers eligibility to the most inefficient models — a feature that the old CARS program did but Colorado’s current one does not.
Eventually, the MPG Illusion will lose its relevance as the American vehicle fleet becomes fully electric. But transitioning to a zero-emissions fleet will take decades, even under the most optimistic projections. Only around 1 percent of cars currently on US roads are fully electric, and more than four out of five new cars sold in the US in 2023 were fully gas-powered.
Like it or not, millions of gas cars will be plying American streets for a long time to come. Policymakers should aim to minimize the total amount of fuel those vehicles consume at the same time that they encourage electrification. They’ll have a much easier time doing so if they incorporate the MPG Illusion into their plans.
