How the ‘Diet Soda Effect’ Cuts the Benefit of Climate-Friendly Cars

By Chris Carroll | Illustration by Jason A. Keisling

Zero-sugar soft drinks and cutting-edge electric cars have more in common than you might expect.

Whether you’re cutting calories or greenhouse gas emissions, you might be slashing the benefits of your purchases by what you buy next—think an order of fries (you earned it!) or a hulking SUV (how do we stuff everything for the campout in a battery-powered hatchback?).

This so-called “diet soda effect” is what James Archsmith, a UMD professor of agricultural and resource economics, and colleagues from Yale University, the Massachusetts Institute of Technology and the University of California, Davis found in six years of California Department of Motor Vehicles purchase data.

The study published in The RAND Journal of Economics shows that 57% of the potential fuel savings—and resulting carbon emissions reductions—of climate-friendly car purchases went up in smoke when families bought their next cars. On average, they were far less efficient, but presumably provided utility (sporty or not) lacking in the efficient cars.

Policies designed to promote environmentally friendly cars need to take into account people’s actual decision-making, Archsmith says: “We have a lot of energy policy out there trying to get people to buy more fuel-efficient cars, but we really think of every car as this separate purchase that doesn’t rely on any other things going on in the household, and that’s just not the case.”


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