Teaching our Children - What's wrong with greed?

goaliedad
Thu, 16 Apr 2009 16:46:16 +0000

Policy frequently does not have the luxury of certainty. All we can do is steer our ship in an uncertain world doing the best we can to understand the world. Yes we will make mistakes and no we can’t be certain a lot of the time. So what?



And unfortunately, we seem to keep repeating the same mistakes. Everyone was giving out environmental hurrahs when the EPA recently raised the future CAFE fuel economy requirements. Of course it would seem that increasing the efficiency of cars (less gas burned to go a mile) would result in fewer C02 emissions, wouldn’t it?

Unfortunately, we have strong empirical evidence that this is not true. It seems that we’ve been down this exact same road before back in the 1970’s. That is when the first CAFE regulations were put into effect, requiring a doubling of fuel efficiency. Unfortunately, somone forgot to tell Congress that when the variable cost per mile drops because of increased efficiency, the number of miles driven goes up. In fact, if you check out the current statistics we now burn (and import) more oil than before. C02 emissions vary directly with the amount of fuel burned as they are not affected by catylic converters.

So while we feel good about each mile we drive, we drive more miles than ever. There was an experiment conducted a couple years back with a cookie line called Snackwells. They were considered by most (I’ve eaten them) to be an excellent, low-calorie snack. If I remember the experiment correctly, they had participants self-serve themselves dessert of either Snackwells (1 group) or regular cookies (another group) both groups knowing the caloric count of what they were eating. I guess it turned out that the Snackwell eaters ended up eating more calories in cookies than the other group because they saw that low per-cookie calorie count.

I think the same can be said about making more fuel-efficient (cheaper to operate) cars. It makes it easy to say that you can afford to drive to places that you didnt’ before.

The message I am trying to send here is be careful what is purported to be “sound environmental policy” as it may not be the case. Separate the politics and rhetoric from the science and you will find the truth.

Tying this back to the greed idea, you might want to make it more profitable (or less costly) to pollute more rather than regulate the output of polluting devices. The market will fix the problem. The greed instinct (not the overwhelming need to keep everything but the general looking out for #1) can be harnessed for socially good ends. Oh, but that is not the economics they teach, is it?