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Update on Letter-Grade Fuel Efficiency Labels

Today, the EPA and DOT announced new fuel-efficiency labels for cars. The new stickers will give shoppers detail on the environmental elements of vehicles—miles per gallon, greenhouse gas ratings and smog emissions.

The labels are an improvement over the current version but doesn’t take into account some of the latest research on behavioral economics. Studies indicate that providing information is not enough—it must be done in a way that simplifies and streamlines the variables or risks overwhelming the user.

Policy Integrity released a statement lamenting this missed opportunity. By foregoing clear, letter-grade efficiency labels, the government passed up the chance to help Americans make smarter choices about fuel efficiency.

We submitted comments last November urging EPA to choose letter-grade labels based on most available economic theory and studies on consumer behavior supporting this format. At the next opportunity, the agency should correct its mistake and select letter-grade labels that would most benefit American consumers.