The Clunker Bust

THE SOURCE: “The Effects of Fiscal Stimulus: Evidence From the 2009 Cash for Clunkers Program” by Atif Mian and Amir Sufi, in The Quarterly Journal of Economics, Aug. 2012.

When the “cash for clunkers” program debuted as part of the Obama administration’s fiscal stimulus program in the summer of 2009, it inspired as much skepticism as glee. Some grumbled that the program wouldn’t help matters, while others saw economic and environmental sense in extending a credit of up to $4,500 toward the purchase of a new fuel-efficient vehicle to motorists who traded in old, pollution-spewing wheels. Economists Atif Mian of the University of California, Berkeley, and Amir Sufi of the University of Chicago argue that, in the end, the program did little to jump-start the economy.

One thing’s for sure, though: The credit got Americans to open their wallets. The program exhausted its $1 billion budget within a week, prompting Congress to approve another $2 billion for the program. Mian and Sufi calculate that an additional 370,000 vehicles were driven off the lot while the credit was available.

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