The Dim-Post

March 30, 2009

Libertarian Paternalism

Filed under: books,Politics — danylmc @ 10:00 am

The DomPost carries the story that the government is investigating a plan to charge supermarket shoppers for every plastic bag they buy:

Based on a “polluter pays” scheme, the initiative would push grocery shoppers to reduce the one-billion plastic bags used each year.

But rather than funding environmental research or sustainability schemes, the cash would help boost supermarket profits.

Environment Minister Nick Smith said yesterday that New Zealanders were over-using plastic shopping bags, and officials were considering whether to legislate bag charges.

“We are a country of just four million people, we use over a billion bags a year, and to me that’s excessive,” Dr Smith said.

He had asked the Environment Ministry to investigate a “polluter pays” scheme that would see charges of about 5c introduced for each plastic shopping bag.

I’m delighted to hear this. One of the things that drove me crazy about Labour was their gut-level Green Party style impulse to ban everything they didn’t like. I think you get a lot further by incentivising peoples actions than you do by sanctioning and punishing them.

If Labour had placed a levy on incandescent bulbs, making them as expensive as compact fluorescent lights then people who needed to buy the old bulbs would have been able to, most consumers would have switched to the energy efficient ones and the environment would be a lot better off, since National repealed the ban on incandescent bulbs as soon as they got into office. (Due to Labour’s ham-fisted botching of this issue, and National’s moronic anti-Nanny state populism it’s going to be almost impossible to have a rational debate around light bulbs and energy efficiency for at least another six years).

Moving along, there’s an emerging body of economic theory around this issue, nicely articulated in a book called Nudge, written by University of Chicago economists Richard Thaler and Cass Sunstein. Since I haven’t actually finished Nudge yet – having put it down half-way through to read a Steig Larson thriller – I won’t try and sum it up myself, instead I’ll quote Freakonomics author Steven Levitt:

The main point of the book (paraphrased) is as follows:

Since people don’t think very hard about the choices they make, it is a lot easier to trick them into doing what you want than to try to educate them or incentivize them to change their behavior. There are many ways to trick people, but one of the easiest is simply by giving thought to the way choices are arrayed to them, or what they call “choice architecture.”

Let’s say you want men to stop accidentally peeing on the floor instead of in urinals in an airport bathroom. (Dubner is fascinated with airport bathrooms, so I’m sure he could think of some incentive schemes.) Or maybe someone could invent a new urinal. The choice architects have an easier solution: paint a fly in the urinal. It turns out with something to aim at, “spillage” is reduced 80 percent.

The Guardian has a more in depth review:

Thaler and Sunstein want to help real, fallible people make better choices without removing their right to choose. In many cases, the nudge required is to remove the need for people to do anything at all, on the grounds that inertia and bone idleness are fixed components of human psychology. Occupational pension schemes, for example, can be established either on an opt-in basis – meaning employees have to make a positive decision to join – or as an opt-out, with workers automatically enrolled in the fund unless they choose to get out.

For Rational Economic Man, there’s no difference. He carefully weighs up the pros and cons of the scheme and makes his decision. But a real person, afflicted by both a ‘status quo bias’ and what Thaler and Sunstein dub the ‘yeah, whatever’ heuristic, the differences are pronounced. Opt-in schemes have participation rates of around 60 per cent, while otherwise identical opt-out funds retain between 90 and 95 per cent of employees. It is no wonder that Adair Turner, in his report on pensions, urged legislation to push pension schemes to an opt-in default position and that policy is moving in this direction.

I wonder how the authors could nudge me into finishing their very worthy and interesting book instead of picking up another Swedish crime novel?

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32 Comments »

  1. Due to Labour’s ham-fisted botching of this issue, and National’s moronic anti-Nanny state populism it’s going to be almost impossible to have a rational debate around light bulbs and energy efficiency for at least another six years

    I’m not sure I’d share the blame so equally between one party doing poor PR on an otherwise sensible measure and another party deliberately poisoning the discourse.

    the cash would help boost supermarket profits

    So plastic bags will boost profits for supermarkets? Aren’t we meant to be tilting incentives the other way?

    Comment by pete — March 30, 2009 @ 11:13 am

  2. So plastic bags will boost profits for supermarkets?

    I don’t really have a problem with this. They are being legally coerced into changing their business model.

    I’m not sure I’d share the blame so equally between one party doing poor PR on an otherwise sensible measure and another party deliberately poisoning the discourse.

    National were the opposition. It was their job to oppose what the government were doing. I see this as almost entirely Labour’s fault – they decided to do something dumb and then couldn’t explain why they were doing it. And then they went and made the same mistake all over again with shower heads!

    Comment by Danyl Mclauchlan — March 30, 2009 @ 11:25 am

  3. There was no ban.

    That’s a wingnut/National Party talking point.

    There was a minimum standard set, which would have excluded most incandescents, but not all. The EECA actually used a fairly intelligent set of incentivisation, minimum standards, and exclusions. Not ham fisted, to my eyes.

    The Labour Party’s mistake was thinking that New Zealand was grown-up enough to have the same changes that California, Australia, the E.U., Japan and others have accepted happily and without descending into hysterical clamour. Clearly, they were wrong.

    Comment by George Darroch — March 30, 2009 @ 11:45 am

  4. Jeezuz. First cycle lanes and now plastic bags. These guys are losing it already and they are barely past 100 days.

    So the basis for policy is that the Minister ‘thinks’ (and I use that word advisedly) that we use too many plastic bags.

    How about some evidence that there is a ‘problem’ that needs to be solved? How about an assessment of this ‘problem’ against other similar problems (eg plastic bottle pollution) to see whether it is a priority? It’s 0.2% of the waste stream for goodness sake.

    They say they hang around in landfills. Well, firstly, that is what landfills are for, secondly, we are not desperately short of space so creating new landfills should not be a major obstacle, and thirdly studies of landfills in the US showed that newspaper is one of the worst things in terms of not degrading. SO sometimes things that appear intuitive to a minister are not.

    Is analysis too much to ask?

    Until they come up with an assessment of the environmental issues and the costs of dealing with them, the so called charge is really just another tax and should be labelled as such.

    As for CFLs,the last govt completely screwed up politically. They missed the tide of public opinion turning against these small irritating interventions into people’s choices and charged on like a bull at a gate pressing compulsory use of a product that many find inferior. It was a political decision and they suffered the consequences.

    Comment by insider — March 30, 2009 @ 11:48 am

  5. George

    “there was no ban”

    Sorry but preventing someone from buying a previously legal product by making it illegal to sell them is a ban, whether it is a direct ban or an indirect one through the use of a meps. Labour tried to sell that line and no-one believed them because it was nonsensical.

    Comment by insider — March 30, 2009 @ 11:50 am

  6. You’re wrong about the plastic bags too. Another National Party talking point.

    The Greens have always endorsed a small charge as one preferred solution to the plastic bag issue. They even introduced a private members bill to do exactly this in 2003. Needless to say, it was rejected by the National Party at the time. It eventually became something quite different, the Waste Minimisation Bill, and by that time Labour was shy of introducing a levy on bags. The legislation does however make doing so much easier.

    There have always been a mixture of policy instruments used by the Greens, with outright bans being used generally only as a last result.

    Comment by George Darroch — March 30, 2009 @ 12:01 pm

  7. National were the opposition. It was their job to oppose what the government were doing.

    Was it really? So what’s their excuse now they are the government?

    Based on the snippets of Nudge you’ve presented, banning/raising the minimum standard set might have been the best way to do things. If a product is no longer available, the nudge to new bulb-purchasing behaviour is pretty much perfect. What was required was a trick that made it not worth while for National to overturn it.

    Comment by Ben — March 30, 2009 @ 12:03 pm

  8. It’s 0.2% of the waste stream for goodness sake.

    0.2% too much.

    newspaper is one of the worst things in terms of not degrading.

    Newspaper goes to recycling in every non-neanderthal locality in NZ.

    are not desperately short of space so creating new landfills should not be a major obstacle

    The problem isn’t space, it’s about preventing needless waste. A plastic bag contains enough oil to drive 100 metres.

    They missed the tide of public opinion

    They missed the tide of godfuckingstupidity on this issue.

    Comment by George Darroch — March 30, 2009 @ 12:08 pm

  9. If Labour had placed a levy on incandescent bulbs, making them as expensive as compact fluorescent lights… they would have had Nanny State!!!1!1!!1! shouted hysterically at them by the same people who reacted so against the MEPS.

    Comment by George Darroch — March 30, 2009 @ 12:12 pm

  10. “newspaper is one of the worst things in terms of not degrading”

    depends if you think that’s a bad thing.

    the more complex carbons bundled up and stuck back into the ground, and away from the biosphere, the better imho.

    Comment by Che Tibby — March 30, 2009 @ 12:12 pm

  11. Umm, whats wrong with biodegradeable plastic bags? They do exist. So why dont we use them?

    Comment by Captain Crab — March 30, 2009 @ 12:15 pm

  12. Che

    “Worst thing” as in assuming things not biodegrading is a bad thing, which appears to be the rationale for the bag tax.

    George

    Plastic bags are not needless waste. you seem to think they have no value. In my home they have multiple functions and are frequently reused – something the alternatives cannot provide. I believe that studies show many people do similar with their bags. The point is has that been factored into any analysis (not read the Green policy BTW)?

    Paper may or may not go into recycling. The facility is available but there is no compulsion to use it. The point is, the rationale for a bag tax is to prevent landfill space being used when it is not used for other more significant and longer lasting waste streams.

    Comment by insider — March 30, 2009 @ 12:26 pm

  13. Danyl, your idea of putting a tax on incandescent bulbs rather than banning them is a good one. It’s also the sort of thing you find in Green Party policy all the time – I’m not sure why they didn’t think of it in this case. But I suspect the fact that we ended up with a proposal to ban them was due to LABOUR’S dislike of price mechanisms – either that, or a belief that they couldn’t go wrong if they copied Australia.

    Comment by kahikatea — March 30, 2009 @ 1:05 pm

  14. On recycling/reusing plastic bags, I’m curious to know…

    1) Does anyone here not have 1000 of them stuffed into a bottom kitchen drawer?

    2) When moving house has anyone done anything other than empty the entire drawer into the bin?

    Comment by gazzaj — March 30, 2009 @ 1:25 pm

  15. Shouldn’t be that hard to recycle them…if your supermarket has recycling bins for them like my central Auckland one. Get the ‘thousand bags’ and bung them in!

    Comment by StephenR — March 30, 2009 @ 1:40 pm

  16. . . . either that, or a belief that they couldn’t go wrong if they copied Australia.

    One of the weirdest thing about the whole debate was that Labour’s defense consisted of saying ‘John Howard did it too!’, as if that was ever a good reason to do anything.

    Comment by danylmc — March 30, 2009 @ 1:52 pm

  17. Well, if New World start charging for their shitty bags, I for one will stop taking them. Just carrying more than a single banana can cause the bag to start to tear at the lower seams, rendering it useless for lining the bin (supermarket bags are the idea size, you see). So I have a contingency plan, via woolworths online: “home brand rubbish bags kitchen tidy lrge 30pk $1.48 ea” that’s a shade under 5c each. So what if they are too big and made of far thicker plastic than I need for my purposes? It’ll be just another example of unintended consequences…

    Comment by Clunking Fist — March 30, 2009 @ 1:55 pm

  18. They missed the tide of godfuckingstupidity on this issue.

    I’m pretty sure Kieth was working in Clark’s office at the time of the light-bulb debacle. While his facts are correct he still seems to think the debate was lost due to proletariat false consciousness (which is what his argument boils down to), instead of really, really bad communications from his own party.

    Comment by danylmc — March 30, 2009 @ 1:56 pm

  19. One of the weirdest thing about the whole debate was that Labour’s defense consisted of saying ‘John Howard did it too!’, as if that was ever a good reason to do anything.

    I always interpreted that as an appeal to the ‘Australia is better’ feeling in the population. Australia is better, must be more like Australia.

    Comment by StephenR — March 30, 2009 @ 1:57 pm

  20. A ‘fee’ you say? I/S and others are calling it a ‘tax’.

    This is big! A tax that goes straight to the supermarkets!

    So much for Labour-lite… Selling off the prisons or the broadcasters I can understand, but National plans to privatise tax!

    Comment by Graeme — March 30, 2009 @ 2:05 pm

  21. National plans to privatise tax!

    I played around with that gag for a while before I wrote my ‘Key to privatise Treasury’ bit.

    Comment by danylmc — March 30, 2009 @ 2:10 pm

  22. There was a minimum standard set, which would have excluded most incandescents

    If that doesn’t amount to a ban I don’t understand the English Language. Poor me.

    Comment by Dave Strings — March 30, 2009 @ 2:20 pm

  23. Danyl, your idea of putting a tax on incandescent bulbs rather than banning them is a good one. It’s also the sort of thing you find in Green Party policy all the time – I’m not sure why they didn’t think of it in this case.

    It just might not have been practical in this case. It certainly would have been less effective and I can imagine a tax wouldn’t have been very efficient. Also, if the ban on incandescents was part of a broader minimum standards set, it would have required exempting them from the set and then taxing them.

    Comment by Ben — March 30, 2009 @ 2:46 pm

  24. With 1000 bags in your kitchen drawer, you won’t be needing to shell out the 5c for new ones for quite some time – just reuse them every time you do the groceries…

    Comment by Sam — March 30, 2009 @ 2:48 pm

  25. Why would the “tax” end up with the supermarkets though? While one part of a tax like this is price-based incentive, the other part of it is paying for the mitigation of the perceived negative public good?
    If we define the public harm here as being the overall cost of landfill, then the proceeds of the tax should be going to Govt programs to mitigate those, not supermarket profits, surely.

    Comment by Gareth — March 30, 2009 @ 2:50 pm

  26. But 5 cents per bag? If I need only two bags I’ll insist on a third one to get my money’s worth :\

    Comment by Jared — March 30, 2009 @ 3:24 pm

  27. This is big! A tax that goes straight to the supermarkets!

    You’ve got to admit, that’s pretty damn weird. Forcing the supermarkets to make more money off me. You can take “business friendly” too far. (I’m aware that the supermarkets won’t actually boost their profits through this, but if there is no difference between a ban and minimum standards there surely it’s fair to say that this scheme amounts to the government taking money off me and giving it to the supermarkets.)

    Comment by Ben — March 30, 2009 @ 3:55 pm

  28. 5c a bag still cheaper than buying bin liners. But aren’t the bags pretty much biodegradable these days? (OK, I think I mentioned that before & was told that theywear down to tiny plastic granules… doesn’t sound that different to silica to me.)

    Comment by llew — March 30, 2009 @ 4:03 pm

  29. I’ve heard they are photodegradeable so you are better off leaving them in the street or hanging from a barbed wire fence where the sun can get at them and do its business

    Comment by insider — March 30, 2009 @ 4:55 pm

  30. So much for that:

    Mr Key said there was no way he was going to support a charge that was in effect a tax going into the coffers of supermarkets.

    “My preference is to find a voluntary and industry-led solution,” he said.

    “I’ve made that very clear to the minister.”

    Asked whether he would preferred to have known in advance about both issues, he replied: “I think it would be more useful if I found out about things before I read about them in the newspaper.”

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10564366

    Key also gave Worth a hard time; I saw Dr Worth on my way home from work today, just outside of Parliament at about 7:15. I greeted him with a cheery ‘Namaste’ but he didn’t reply.

    Comment by Danyl Mclauchlan — March 30, 2009 @ 8:39 pm

  31. OK here is how you read the book. Keep it in the bathroom!!! that way whenever you dispose of solid waste(assuming you take a luxurious 10-15 mins) you will read a small amount of the book ;-). Think of it as ‘opt out’ rather than ‘opt in’ reading as picking up the nearest book to accompany your bowel motion represents the path of least resistance.

    However my experience my not be typical as i like to “visit the office” with a sitcom on my video ipod.
    ;-)

    Comment by Ebolacola — March 30, 2009 @ 10:11 pm

  32. TANSTAAFL

    Comment by Dave Strings — March 31, 2009 @ 7:48 am


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