Did the Cash for Appliances Program Work?

Fifty states and six territories have launched "Cash for Appliances" programs since late last year. Each one had the same amount of money -- about a dollar per resident -- but the results have been wildly different. Some states ran through their entire rebate budgets in hours; others can't seem to give away their money. What's been going on?

Cash for Appliances, modeled on (or at least nicknamed after) last year's "Cash for Clunkers" program, was funded as part of the $787 billion stimulus bill. Unlike "Cash for Clunkers", the appliance rebate program wasn't designed and administered by the federal government. Instead, the government directed $300 million to the 50 states (plus D.C. and several American territories), at a ratio of roughly $1 per person in each state. Each state then had the opportunity to design their own program within the general guidelines given by the government. [The chart below shows all states' programs, and how long it's taken to fulfill them. Click here for a full-sized image.] 

As you'd imagine with a lot of cooks in the kitchen, no two states designed their rebate program in the exact same way: rebate amounts, categories, eligibility, application processes and marketing plans have all differed. As have the results… Ten states had crushing consumer demand that caused them to run out of rebate funds within 4 days of the respective program start dates, with complaints of flooded call centers and crashing websites. Thirteen other states still have desperate operators standing by and literally can't give away their money.

Comparing State by State Rebate Programs

It's not just a matter of some states having better deals than others. Take, for example, refrigerator rebates in Massachusetts, Minnesota and California. The programs in all three states offered $200 rebates on efficient refrigerators. Massachusetts and Minnesota "sold out" in 1 day and 2 days respectively. California? Same rebate amount, but the program has been open since April and still has $19 million in rebates unredeemed.

Across the country, the rebate categories and amounts are all over the board:

Category Smallest State Rebate Largest State Rebate
Refrigerators $50 $700
Clothes Washers $35 $800
Freezers $25 $600
Dishwashers $25 $400
Air Conditioners $20 $1,075
Furnaces $100 $2,000
Heat Pumps $75 $2,000
Water Heaters $100 $1,400
Solar Water Heaters $150 $1,200
Boilers $100 $1,200

So what attributes matter the most when it comes to determining whether a state program sells out quickly or not at all? The answers aren't as straightforward as you'd think. We did some analysis to compare each of the programs to see what predicted their likelihood to sell out.

What Doesn't Matter

Average Electricity Rates: One of the biggest surprises in analyzing the state by state rebate data is that the average price of electricity in a state has almost no impact on how popular its Cash for Appliances program is. Consumers don't seem to be thinking about this program in terms of its ability to save them money over the long-term -- otherwise, we'd expect to see that the states with much more expensive electricity selling out their rebate programs much more quickly than those that have relatively cheap power.