Last week I talked a bit about the waste of money that we named “Cash for Clunkers”.
In short, what I said was that car purchases are elastic. People can pull forward or push out the purchase of a new car by several months. In this case it turns out to be 7:
The government’s “cash for clunkers” program boosted auto sales by 360,000 during the two months it was in place. In the seven months that followed, sales were down by 360,000 compared with what they would have been without the program…
Basically, 7 months after cash for clunkers ended, the same amount of cars wound up being sold.
Wanna know the unintended consequence?
