Clunkers or Junkers? Adverse Selection in a Vehicle Retirement Program | Zendy

Ryan Sandler | Zendy

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Clunkers or Junkers? Adverse Selection in a Vehicle Retirement Program

Author(s) -

Ryan Sandler

Publication year - 2012

Publication title -

american economic journal economic policy

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.868

H-Index - 62

eISSN - 1945-7731

pISSN - 1945-774X

DOI - 10.1257/pol.4.4.253

Subject(s) - counterfactual thinking , depreciation (economics) , selection (genetic algorithm) , construct (python library) , business , adverse selection , transport engineering , economics , actuarial science , engineering , computer science , economic growth , psychology , artificial intelligence , social psychology , financial capital , capital formation , programming language , human capital

Vehicle retirement programs have become popular tools of public policy for reducing pollution. The efficacy of these programs is difficult to measure, as it is difficult to tell how much a vehicle would have polluted otherwise. I estimate that counterfactual using data from a long-running local program in California. I utilize the universe of emissions inspections from the California Smog Check Program to construct vehicle usage histories of retired cars and similar vehicles which did not retire early. I find that the program's cost-effectiveness steadily declined over time because of the depreciation of the vehicle fleet, while adverse selection remained a problem throughout. (JEL D82, Q53, Q58, R48)

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