Cash for Clunkers: Smart or Stupid?

An image model of the Toyota Prius used in a study on seeing car "faces." The Prius ranked low on the "power" scale. CREDIT: Toyota/Truls Thorstensen

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Starting today, you can get cash vouchers for that old gas-guzzling clunker under the new $1 billion federal Car Allowance Rebate System. All you have to do is trade your old car in on a new one at a participating dealer and the cash will be applied to your purchase.

The vouchers range from $3,500 to $4,500, and as a sales incentive, some dealerships plan to match the rebate with one of their own. To qualify, your vehicle must get 18 mpg or less and be less than 25 years old (just keep driving that Pinto!).

Critics say the rules — you have to buy a vehicle that gets just 4 mpg more than your old one — will act as a subsidy for the purchase of SUVs and trucks, rather than putting a fresh fleet of 40-mpg Prius models on the roads, as ABC explains.

(Interesting aside: The national mpg average has changed very little since the Model T.)

A friend of mine joked that his ancient truck, which he's stubbornly held on to since Bon Jovi was a household name, was probably worth about $900, but now it is suddenly worth about $4,500. I doubt he's thinking about gas mileage in pondering whether to trade it in. I drive an old Jeep Wrangler (1999), and I admit the program has me pondering whether the new Jeeps get good enough gas mileage to qualify me. Truth is, however, that keeping my old paid-for vehicle, with its low insurance rates, is financially smarter for me. And the new Jeeps look kinda cheesy anyway.

The program runs through Nov. 1 or when the $1 billion runs out, whichever comes first.

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In The Water Cooler, Imaginova's Editorial Director Robert Roy Britt looks at what people are talking about in the world of science and beyond. Find more in the archives and on Twitter.