19.2.03

PEOPLE RESPOND TO INCENTIVES. Virginia Postrel on SUVs: "I do think it's ridiculous to bias federal policy in favor of SUVs and against station wagons and minivans. That's what the Corporate Average Fuel Efficiency (CAFE) standards for fuel efficiency do. But, rather than raise standards for SUVs, I'd prefer to dump CAFE regulation altogether. It's a ridiculous approach to the issue. If we must have a federal policy to reduce fuel consumption, it should take the form of a hefty gasoline tax, preferably offset by cuts in income or payroll taxes. A tax affects actual fuel use and treats all cars, of all years, equally." Quite. There is no reason to purchase a fuel-sipping car if gasoline is cheap by historical standards.

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