Now that gas prices are eating into your lifestyle, you may be considering getting rid of that SUV or becoming a Prius owner. Before you head out shopping, let’s look closely at how mpg will affect how much you spend on gas.
Pat & Joe own two cars, a small sedan and a SUV. They drive each vehicle 10K miles a year. The sedan gets 20 mpg while the SUV gets 8 mpg. With 4 kids they need at least one large vehicle. Given the price of gas, Pat & Joe are considering making a car move.
Option 1 Sell the SUV and get a minivan
At 8 mpg, no doubt about it that SUV is a gas hog. If they can replace it with a 20 mpg minivan, a 12 mpg difference would certainly cut down on fuel consumption.
Option 2 Sell the Sedan and purchase a very efficient small car that will get 50 mpg.
Wow, 50 mpg, a 30 mpg improvement.
Based solely on Pat & Joe’s desire to spend less on gas, which option should they choose?
Most people answer this question wrong – did you?
Here’s the math:
10,000 miles / 8 miles per gallon =1250 gallons of gas x $3.50 =$4,375 to keep the SUV rolling
10,000 miles / 20 miles per gallon =500 gallons of gas x $3.50 =$1,750 for a minivan
Pat & Joe would spend $2,625 less on gas if they replace the SUV with a minivan.
10,000 miles / 20 miles per gallon =500 gallons of gas x $3.50 =$1,750 for the sedan
10,000 miles / 50 miles per gallon =200 gallons of gas x $3.50 =$700 for the high mpg car
Pat & Joe would only save $1,050 if they replace the sedan with a high fuel efficiency car.
This is yet another example how our intuitive answer is often wrong.
Rick Larrick & Jack Soll write about this at their scientific blog, The MPG Illusion.