{"id":573,"date":"2013-05-01T13:11:43","date_gmt":"2013-05-01T18:11:43","guid":{"rendered":"http:\/\/blogs.edf.org\/markets\/?p=573"},"modified":"2013-05-01T13:11:43","modified_gmt":"2013-05-01T18:11:43","slug":"follow-the-plastic-bag-example-nudge-polluters-to-pay","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/markets\/2013\/05\/01\/follow-the-plastic-bag-example-nudge-polluters-to-pay\/","title":{"rendered":"Follow the Plastic Bag Example, Nudge Polluters to Pay"},"content":{"rendered":"

(This post was first published on EDF Voices<\/a>.)<\/em><\/p>\n

Nudge<\/em><\/a>\u00a0is the best kind of book. It presents the type of head-slappingly obvious solutions to public policy problems that make you wonder why you needed a book to tell you about them in the first place. Place the veggies before the French fries in the cafeteria, and people will eat more greens. Enroll employees into retirement programs with the option of opting out rather than in and they\u2019ll save more as a result.<\/p>\n

Such nudges are the best kinds of policy interventions: minimum intrusion, maximum freedom of choice, maximum relative impact. But one area in which\u00a0Nudge<\/em>\u00a0comes up short is global warming. Putting smiley faces on your electricity bill as a reward for using less electricity than your neighbor, something\u00a0oPower<\/a>\u00a0has done with utilities around the country, helps bring down electricity use by\u00a01 to 3%<\/a>. Better than zero, but not\u00a0the<\/em>\u00a0solution by a long shot.<\/p>\n

That solution would be making polluters pay: putting a price on carbon dioxide through a direct cap or tax on carbon pollution. Cass Sunstein, who wrote\u00a0Nudge<\/em>\u00a0with Richard Thaler, says as much in\u00a0his latest piece<\/a>\u00a0on the topic. He laments the fact that we don\u2019t seem to be able to get these kinds of taxes passed, and then adds a few items to his running list of things we can do, all under the broad heading of setting \u201cclean-energy default rules<\/a>\u201d: Change the default printer setting to \u201cprint on front and back,\u201d and people will. Enroll people into programs where they spend extra for clean energy (with the option of opting out), and 90% will choose to stick with the clean energy.<\/p>\n

All these proposals represent the best of what nudges ought to be. Policymakers need to set defaults either way. So set them in the way that goes furthest toward achieving your goal. Just that there\u2019s still a big gulf between the policies we know are necessary and what appears to be doable.<\/p>\n

The plastic bag solution<\/strong><\/p>\n

But there is one policy that seems to bridge the gap between the type of non-intrusive nudges Sunstein champions and the type of policies he knows are ultimately necessary to do something about global warming. They\u2019re called bag taxes.<\/p>\n

In 2002, Ireland started charging shoppers 15 eurocents a plastic bag. The result: bag use\u00a0plummeted 90 percent<\/a>. That’s a billion bags a year.<\/p>\n

In 2010, Washington, D.C., began charging 5 cents per disposable bag, paper or plastic. As a result, plastic bag usedeclined 80 percent<\/a>\u00a0within a year by some estimates.<\/p>\n

These fees are tiny. Compared to the $100 worth of groceries you\u2019ll be carrying home in your bags, they might as well be zero. The point is that they are not. The fees are big enough to change the default behavior of shoppers. A few pennies (and the odd public information campaign) are all it takes to motivate shoppers to bring reusable bags to the store.<\/p>\n

It\u2019s quite a leap from plastic bags to carbon prices. The principle is the same: It\u2019s the price that counts\u2014a price that is directly connected to an action. Change the action (stop using plastic bags) and you avoid the fee. Similarly, increase the price of carbon, watch carbon pollution fall. This price-up-demand-down relationship is so well established, it\u2019s one of the very few actual \u201claws\u201d economists have. Violations are tough to find. Plastic bags and carbon certainly don\u2019t violate this common sense principle.<\/p>\n

Bag fees and carbon prices have this important feature in common. They don\u2019t just nudge, they also charge consumers for the cost of their\u2014our\u2014actions. For carbon dioxide, there are plenty of studies that estimate the cost to society of this type of pollution. The right price for each ton of carbon dioxide would be at least about\u00a0$20<\/a>. Given the fact that the average American emits his body weight worth of carbon dioxide every day and a half, that comes out to about $1 per day. Double it to account for the fact that there are plenty of damages we haven\u2019t yet incorporated in the official number, and doing something serious about global warming is still a bargain at $2 per person per day.<\/p>\n

As an insurance policy against the worst effects of global warming, that\u2019s tiny. Never mind how small a price, though, the politics of actually doing it are tricky, to say the least. The plastic bag lobby just isn\u2019t as important as the fossil lobby. And bag fees can be implemented on the local level. A carbon price can\u2019t. It requires Congressional action, a seeming oxymoron these days. Even with carbon, though, states\u2014if not cities\u2014can lead the way. Look no further than California and its comprehensive cap-and-trade system. It limits carbon pollution with a firm, declining cap, giving Californian businesses maximum flexibility in how to make their operations more efficient and innovate their way out of the high-carbon, low-efficiency bind. That ought to be a template for the nation.<\/p>\n

Meanwhile, we can do a lot worse than look to plastic bag fees as a model for the kinds of policies that we know are necessary to tackle global warming. Cass Sunstein, the co-author of\u00a0Nudge<\/em>, and Cass Sunstein, the policy analyst calling for a price on carbon pollution, would approve.<\/p>\n","protected":false},"excerpt":{"rendered":"

(This post was first published on EDF Voices.) Nudge\u00a0is the best kind of book. It presents the type of head-slappingly obvious solutions to public policy problems that make you wonder why you needed a book to tell you about them in the first place. Place the veggies before the French fries in the cafeteria, and …<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[330],"tags":[],"coauthors":[],"class_list":["post-573","post","type-post","status-publish","format-standard","hentry","category-politics"],"acf":[],"yoast_head":"\nFollow the Plastic Bag Example, Nudge Polluters to Pay - Market Forces<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.edf.org\/markets\/2013\/05\/01\/follow-the-plastic-bag-example-nudge-polluters-to-pay\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Follow the Plastic Bag Example, Nudge Polluters to Pay - Market Forces\" \/>\n<meta property=\"og:description\" content=\"(This post was first published on EDF Voices.) 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