Potomac Fever is the blog of the Hamilton College Semester in Washington Program.
Cash for Clunkers cost the government either $3500 or $4500 per car. It doesn't "not count" if people would have bought cars anyway.
Of course it does. The whole point was to incentivize people to buy cars. If they were going to buy those cars anyway, the money was wasted.
Not really. The money was obviously intended, first, as an incentive to buy cars. But it's also a behavioral incentive--if the governments get people to buy cars all at once, it gives the impression of the economy picking up and consumer confidence rising, etc.
Oh I see. So we're doling out money to give the impression that the economy is recovering. Might we consider economic policies that do spur recovery?
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