Luxury fever and GHG reduction

From a global-warming perspective, you’d rather have people buying $100,000 wristwatches than $100,000 Hummers.

Dealing with global warming requires reducing humanity’s global greenhouse-gas (GHG) footprint. In the abstract, this can be done in any of six ways:

1. Reducing population.

2. Reducing total economic output per capita.

3. Changing technologies so as to be able produce the same output emitting less net GHG.

4. Shifting production to less GHG-intensive forms (given some set of available technologies and consumer preferences) by changing relative prices (e.g. by GHG taxation or cap-and-trade).

5. Shifting consumption to less GHG-intensive forms by changing relative prices.

6. Shifting consumption to less GHG-intensive forms by changing norms and tastes, and by improving the accuracy of consumers’ perceptions about the GHG-intensity of various goods and activities.

So much is obvious. What’s less obvious (or was less obvious to me until Chris Field explained it at lunch) is that this ties back in to the exchange between Mike O’Hare and Jonathan Kulick (prompted by Robert Frank) about absurdly expensive wristwatches.

Of all the consumer goods on the planet, the absurde $100,000 wristwatch may have the lowest ratio of GHG emitted to dollars spent. If, above a certain level, people spend money in large part to impress themselves and one another with how successful they are, convincing them to do so by acquiring $100,000 watches rather than $100,000 Hummers would constitute a great environmental triumph. The same is true when someone builiding a McMansion decides to spend the last $1m of the building budget on a Rothko rather than an extra 2000 square feet of house.

Another way to reduce the GHG-intensity of the economy would be to move consumers from a typically American to a typically Japanese attitude about the tradeoff between quantity and quality. A suit that costs twice as much (and is worn for twice as long) doesn’t consume twice as much energy in its production as a cheaper suit that looks shabby after a year. (Megan McArdle makes a related point about handbags.)

Making consumers less “materialistic” seems like an uphill battle. Making their materialism less energy-intensive seems as if it might be easier.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: