This slideshow charts the cost of driving measured in hours worked per mile driven, taking into account trends in wages, gas prices, and fuel efficiency

1. Economics for your Classroom from
Ed Dolan’s Econ Blog
By One Measure,
the Cost of Driving is
Now Lower than Ever Before
Dec. 29, 2014
Terms of Use: These slides are provided under Creative Commons License Attribution—Share Alike 3.0 . You are free
to use these slides as a resource for your economics classes together with whatever textbook you are using. If you like
the slides, you may also want to take a look at my textbook, Introduction to Economics, from BVT Publishing.

2. How Much Does it Cost to Drive Your Car a Mile?
 When you think of the cost of driving
your car a mile, you probably think of the
out-of-pocket cost—the money you pay
at the pump
 Economists, instead, like to look at the
opportunity cost—what did you have to
give up to drive a mile?
 One way to measure opportunity cost is
to ask, how many minutes do you have
to work to buy the gas you need to drive
a mile?
Dec. 29, 2014 Ed Dolan’s Econ Blog
Workers assemble flywheels
for Model T cars in a 1913
Ford assembly plant

3. How to Calculate Opportunity Cost
The opportunity cost of driving,
measured in minutes worked per
mile, depends on three things:
 Your wage, in dollars per hour
 The price of gasoline in dollars
per gallon
 The efficiency of your car in miles
per gallon
Dec. 29, 2014 Ed Dolan’s Econ Blog
Example:
 You earn $18 per hour
 Gas costs $3.00 per gallon
An hour’s wage buys 6 gallons of gas,
or 10 minutes of work per gallon
 Your car gets 25 miles per gallon
Ten minutes work gets you 25 miles,
which means the opportunity cost of
driving is 0.4 minutes (24 seconds)
worked per mile

4. 1919: 1.7 Minutes per Mile
 In 1919, a nonsupervisory worker
earned about 50 cents per hour
 A gallon of gasoline cost about 25
cents
 A Model T Ford got about 17 miles
per gallon
 That works out to about 1.7 minutes
per mile
Dec. 29, 2014 Ed Dolan’s Econ Blog
1919 Ford
Model T Highboy Coupe

5. 1935: 1.2 Minutes per Mile
 In 1935, a typical worker earned
about 56 cents per hour
 A gallon of gasoline cost about 17
cents
 A Ford V-8 got about 15 miles per
gallon
 That works out to about 1.2 minutes
per mile
Dec. 29, 2014 Ed Dolan’s Econ Blog
1935 Ford Phaeton

6. 1950: 28 Seconds per Mile
 By 1950, a typical worker earned
$1.59 per hour
 A gallon of gasoline cost 18 cents
 A Ford V-8 got 14 miles per gallon
 That comes to just under half a
minute per mile
Dec. 29, 2014 Ed Dolan’s Econ Blog
1950 Ford Custom Tudor

7. 2014: 11 seconds per Mile
 By December 2014, an average
nonsupervisory worker earned
$20.74 per hour
 A gallon of gasoline averaged $2.40
 My 2014 Ford Fiesta* is rated at 36
miles per gallon (although it actually
does a little better than that)
 At that rate, it takes just 11 seconds
to earn enough to drive a mile
*Eco-boost gasoline engine, 3 cyl, 1 liter, turbocharged, not a hybrid
Dec. 29, 2014 Ed Dolan’s Econ Blog
My 2014 Ford Fiesta

8. The 100-Year Trend
 This chart shows the entire 100-year
trend, based on the average wage of
production and nonsupervisory workers
and the US average gasoline price
 The red points and trend line are based
on selected popular Ford models
 The blue line is based on the average
fuel economy of all cars on the road,
both old and new
 The bottom line: If you drive Ford’s most
efficient gasoline model (excluding
electrics and hybrids), the opportunity
cost of driving is at an all time low
Dec. 29, 2014 Ed Dolan’s Econ Blog

9. Click here to learn more about Ed Dolan’s Econ texts
For more slideshows and commentary, follow Ed Dolan’s Econ Blog
Like this slideshow?
Follow @DolanEcon on Twitter