The MPG Illusion is confusing to car buyers – even after someone explains it.

Take a look at the above fuel efficiency label? Can you understand it? Do you think other people can?

Last week, the Environmental Protection Agency released two options for replacing the current fuel efficiency stickers displayed on new car windows. Before releasing these options, the EPA conducted an online survey and sixteen focus groups held around the country, the results of which the Nudge blog has been looking through.

Hopefully, you first noticed the two numbers at the bottom of the label, 4.5 and 3.3. Unless you’re buying a Ferrari, those probably seem too low for a standard miles-per-gallon statistic, right? You look closer and notice that they aren’t MPG numbers at all; they are GPM (gallons per mile) numbers.

GPM is a statistic in the news, thanks to work on the MPG Illusion, which shows that people misunderstand the non-linear relationship between gallons of gas consumed and distance traveled. One of the major implications of this research is that it obscures the value of improvements as fuel efficiency improves. People tend to undervalue small mpg improvements on inefficient gas guzzlers, and overvalue large jumps between two fuel sippers, like a Honda Civic and a Toyota Prius.

There have been many proponents of a new GPM metric, and the New York State Senate recently passed a law requiring it in car dealership showrooms. As part of its research, the EPA investigated consumer response to the concept. For the moment, the EPA found that consumers struggle with the MPG illusion, even when it is explained to them. For those who were able to understand the concept, they still expressed a preference for MPG over GPM because they were used to thinking in MPG terms. The EPA concluded:

It may be said that understanding the MPG illusion is extremely difficult to achieve and does not necessarily lead people to switch to a different type of vehicle nor does it make them prefer gallons per 100 miles over MPG. In essence, people prefer familiarity over facts.

Focus group respondents found the label shown above particularly confusing, not just because of the GPM statistic, but because it is presented in the slider in the upper right-hand corner with a range of 2 (best) to 10 (worst). Without a general knowledge of gas guzzler and hybrid GPMs, the scale made little sense. In the end, the EPA decided to continue using MPG estimates as the primary fuel consumption statistic. “If there is a desire to introduce ‘gallons per 100 miles’ estimates,” the agency concluded, “do so in a way that positions it as additional information and use the same font size for presenting the MPG and gallons per 100 miles information.”

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  • http://philmaymin.com Phil

    How about GPW — gallons per week. How many gallons per week would a typical driver require in this car? Because then I can multiply it by the $3 or $4 price of gas, scale it a bit up or down depending on how I think of my commute relative to the average, and immediately understand it.

    Then it becomes even more intuitive than MPG.

    “What’s your MPG?”
    “My what? I dunno. How many gallons a week does your car chug?”
    “Gallons per week?”
    “Yeah. I only have to feed it 10 GPW but the gas-guzzler I bought for my wife needs 20 GPW, but she drives less so I guess it’s okay.”

    And in doing the actual calculation for miles per week you can just assume it’s like 200 miles since many warranties and leases are like 10,000 miles per year.

    (Of course this should all be voluntary, not government regulated!)

  • EU

    As a crazy European, I’m used to comparing fuel consumption in litres/10 km. Whenever I try to make sense of a MPG figure, the inversion in combination with the units leads to overload. GPM I think I can manage.

  • Anonymous

    The following is opinion, not based on any research of the facts.

    I wonder if part of the problem is that, aside from golfers, most of us think “more is better” most of the time. You want a higher salary and a higher bowling/bridge/baseball score. Higher speed gets you there faster and wins races. And so on. Thus, MPG is consistent with the bias and GPM is not… making GPM unfamiliar and difficult. You’ll note on the label that they had to be specific: “10 worse; 2 better.” That by itself is a self-defeating admission that the stat will be hard for the average (i.e., strongly biased that more is better) consumer to interpret.

    A possible solution is to create a “Fuel Efficiency Rating” that follows some formula like FER = 10 – GPM. Now “10″ is as good as it gets… an electric vehicle that burns no gas.* A “1″ is pretty bad and <1 should be illegal except for very low volume vehicles. This sort of rating has the linearity of GPM without cutting across the cognitive bias.
    [I am interested in EU's thoughts on the above since his bias is different.]

    * All-electric vehicles present their own problems. Per Scientific American, all-electrics may in fact result in more CO2 emissions in some circumstances. But, that aside, all-electrics should probably have a rating system akin to the EnergyStar ratings on refrigerators, measures in $/year. Per Phil, perhaps this is the best measure.

    • C. Daggett

      I agree with your “more is better” insight. I also question the coloring scheme for this label, which is orange to white–orange being “worse” and white being “better.” This seems odd. A better coloring scheme, for example, would be: red, orange, yellow to green–red being “worse” and green being “better.” This would be instantly recognizable and familiar to most.

  • Jonny

    I can see the maths behind this and everything, but I can’t see the point. If people tend to think that changing between a 45mpg to 50mpg car is as rewarding as changing between a 15mpg to 20mpg then why change that?

    Surely you want to encourage people to change their 15mpg gas-guzzler to a 50mpg green machine not just settle for a 20mpg gas-guzzler, and it seems to me that by showing that the difference between 30mpg to 45 is not as good as 15 to 30mpg, it gives people an excuse to only get a 30mpg car next time and takes away the incentive to be more green.

    Maybe that’s just me?