Cash for Clunkers Incentive May Lead to Unintended Consequences

The CLD above shows the mental model behind Blinder's idea that the "cash for clunkers" program will lead to a cleaner environment by reducing the number of older more pollutant cars.  The CLD also shows Levitt's argument that this plan will actually cause owners of older cars to keep than longer than they would have originally in order to receive the full benefits of the program, which would then in turn keep these more pollutant cars on the road longer and reverse one of the purposes of the program which is improving environmental quality.  It seems that Levitt's scenario is likely to occur if the program requires the car to be a certain year, which would definitely make some people hold on to their more pollutant cars longer than they would have originally and this appears to be one of the major driving factors of the loop along with just the number of older cars on the road overall.  Blinder's mental model is shown more specifically by balancing loop number one that is appropriately titled "Cleaning Up the Streets," while Levitt's mental model is represented by reinforcing loop number one which is titled "Clinging to Old Clunkers."  This model shows the unintended consequence that Levitt suggest may occur if this program is implemented.