Technology and the Environment: Part II: The Nudges Strike Back

Picking up on Michael’s post, here is an article written by a thoughtful economist on why there could be $20 bills lying around on the streets.   In my Los Angeles, water is cheap and even electricity prices are low.  If consumers faced higher water and electricity prices, we would see a faster diffusion of the products that Michael champions.   I am in Rome right now and facing $6 a gallon gas — the entire vehicle fleet consists of two door tiny cars.  People respond to incentives.  

Sunstein and Thaler have stressed the power of the nudge in changing behavior.  In the case of technology adoption, does one size “fit all”? If I simply drop off some free lightbulbs at your house, does this first taste  hook you on the “green bulb” from now on?  For some households the answer will be “yes” and for some households “no”. A serious social scientist should have a predictive model for determining which households are most susceptible to such a simple nudge.  Will socio-economic status (i.e poor, or college graduate) predict the adoption decision? Will political identity play a key role in how the household responds to this nudge?

Author: Matthew E. Kahn

Professor of Economics at UCLA.

4 thoughts on “Technology and the Environment: Part II: The Nudges Strike Back”

  1. Further salient questions from an anti-paternalist: do people react differently to peer-to-peer nudging than they do to the sharp elbow of authority? Which people? Does it matter whether the nudge is done openly, or is largely invisible, or whether it is done for one overt reason but there are grounds to suspect the nudger of another? Will reactions to soft manipulation change over time, as people become more adept at recognizing it and aware of its uses?

    How big is the place for ‘self-nudging’ in all this – arranging one’s life, singly or in voluntary groups, so that it becomes easier and more pleasant to do the things one deems one ought to be doing? How effective is that relative to managerial or unsolicited peer-to-peer nudging? How far does the Green movement do that now, and what’s to learn from its successes and failures? How easy, and even how valid, is it for sociologists to model something as diffuse and disorderly as fluid, spontaneous self-organization? Does this bias the kind of solutions they’ll be able to offer?

  2. “In my Los Angeles, water is cheap and even electricity prices are low.”

    We could fix that quickly enough: sell the Department of Water and Power to for-profit capitalists, who would have the proper incentives to lie, cheat and steal. Perhaps, we could taint the water supply, creating a larger growth market in bottled water. Or, make the DWP sell its power plants, and buy electricity in a “competitive market” for power, where the whole enterprise could be bankrupted, as was Southern California Edison, after which the state could bail it out, and rate-payers would see their rates soar.

  3. I think we have a dreadful tax and fee system, nudging us AWAY from socially best behavior. Gasoline costs too little, as does energy in general. We throw money at Archer-Daniels-Midland to make human food into fuel, and inefficiently. We give tax deductions on mortgages which mostly subsidize the housing preferences of rich people, and do very little to get lower middle class people into houses they own. We raise a lot of the federal budget from corporate taxes and from income taxes on the upper middle and upper classes, which has some tendency to move corporate activities out of the country. Much of the tax burden on gasoline and tobacco and liquor is imposed at the state level, which encourages people to cross borders to shop. We pay for roads through either general fund taxes or gasoline taxes, and then road use is free, so there is no incentive to car pool or to drive at non-rush hours. We fail to tax internet/mail order purchases, creating an unlevel playing field for commerce skewing away from local stores and toward UPS and Fedex and Amazon. So, yes, I kind of buy the idea that stronger nudges are likely appropriate – but a first step is to get rid of the nudges which go in the wrong direction!

    Back to Mike’s toilet example. We have been consumers of toilets over the last few years, in our 1952 house. We have some dawn-of-time 5 gallon flushers. work great! We bought some low-flow 1.6s in 2000 – nasty complicated things which didn’t carry away solid waste terribly well, made a lot of noise, had some bizarre internal air pressure bladder to help things along. And when we replaced the 1.6s this year, the new ones work flawlessly, carry all our sins away on the first flush, wonderful. I have stopped seeing Craiglist ads imploring people to sell old 5 gallon flushers. So I think that’s a success, but it might have been better, and engendered less resistance, if the first mandate had waited for better low-flows to be available.

  4. “If I simply drop off some free lightbulbs at your house, does this first taste hook you on the “green bulb” from now on? For some households the answer will be “yes” and for some households “no”. ”

    You mean like City of Pasadena did for me (living in Pasadena, next door to Los Angeles city) about eighteen months ago?
    It seems like there’s hardly a need to hypothesize about what might happen. The experiment has been done. All you need is to send people around Pasadena asking households what they did in response to receiving their free CFLs.

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