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Brooks Wilson's Economics Blog: Americans See the Light

Monday, July 27, 2009

Americans See the Light

A simple economic view of the light bulb industry might begin by comparing incandescent and recently introduced fluorescent bulbs.  Each provides light with a fixed cost, the purchase price, and a variable cost, the amount of electricity used per lumens.  They also differ in life, quality of light emitted, etc.  They are substitutes goods; the use of one substitutes for the use of the other.  As fluorescent bulbs were introduced, they took a segment of the market from incandescent bulbs.  If consumers considered fluorescent bulbs to be superior, they would have cannibalized the market share of incandescent bulbs much the way that MP3 players cannibalized the market for music playing devices from CD players.  Since they did not, any self respecting analyst would conclude that consumers' as a whole, prefer incandescent bulbs.

Our elected officials noted voter dissatisfaction with high oil prices that peaked in the summer of 2009, and decided that action was needed.  Action came in the form of the Energy Independence and Security Act of 2007, a mostly xenophobic and silly law.  To increase the supply of energy, the bill includes a give away to farmers, as if they needed more welfare, through mandates for increased production of biofuels.  The bill hits at consumers' demand for energy, raising CAFE standards and mandating the use of fluorescent bulbs. 

The Rasmussen Reports article, "72% Don’t Want Feds Changing Their Light Bulbs," dated July 23, 2009 surveys Americans about the ban on the sale of incandescent bulbs in favor of more expensive fluorescent ones.  Rassmussen finds that
Just 18% of adults think it’s the government’s job to tell Americans what kind of light bulb they use, according to a new Rasmussen Reports national telephone survey. Seventy-two percent (72%) say it’s none of the government’s business, and 10% are not sure...

Eighty-three percent (83%) of Republicans and 78% of adults not affiliated with either major political party say it’s not the government’s role to make Americans change their light bulbs. Among Democrats, 58% share that view, but 29% say it is the government’s job...
The survey also found that Americans wisely believe that markets generally provide better products than government.
When asked who would do a better job of providing quality products for consumers, only 23% of Americans say government planners and managers. Fifty-nine percent (59%) have more confidence in companies hoping to make a profit. Nineteen percent (19%) aren’t sure.

Men have more faith in the private sector than women. Sixty-eight percent (68%) of those who work for a private company say businesses motivated by potential profit will do a better job of coming up with quality consumer products. Just 45% of government employees agree.

Seventy-four percent (74%) of Republicans and 67% of unaffiliateds give the edge to private companies, while Democrats are almost evenly divided over which would do a better job.
Sadly, many Americans believe that they or perhaps other Americans need to make "major cutbacks in their lifestyle to save the environment, and elected officials are ready to help. 
Nearly half of Americans (49%) agree, however, that they need to make major cutbacks in their lifestyle to save the environment. Thirty-six percent (36%) disagree, and 15% are undecided.

This marks a significant change from early May when 42% supported major lifestyle changes to better the environment but 44% were opposed.

Sixty-eight percent (68%) of Democrats agree that Americans need to make major changes in lifestyle to help the environment, but 55% of Republicans don’t believe such changes are necessary. Unaffiliated adults are closely divided over the question.
I wonder if our abstract desire to cut back on our lifestyle will hold when faced with concrete examples of those cutbacks.  If Americans are unhappy with the government when it orders them to use inferior light bulbs, what will happen when they see the vehicles that roll off the assembly line in response to the increase in CAFE standards?  Maybe Americans would rather determine where they cutback rather than have the government tell them.

1 comment:

  1. Hardly surprising about the light bulb poll...

    Americans choose to buy ordinary light bulbs around 9 times out of 10.
    Banning what Americans want gives the supposed savings - no point in banning an impopular product!

    If new LED lights -or improved CFLs- are good,
    people will buy them - no need to ban ordinary light bulbs (little point).
    If they are not good, people will not buy them - no need to ban ordinary light bulbs (no point).
    The arrival of the transistor didn't mean that more energy using radio tubes had to be banned... they were bought less anyway.

    All lights have their advantages
    The ordinary simple light bulb has for many people a pleasing appearance, it responds quickly with bright broad spectrum light, is easy to use with dimmers and other equipment, can come in small sizes, and has safely been used for over 100 years.

    100 W+ equivalent brightness is a particular issue - difficult and expensive with both fluorescents and LEDS - yet such incandescent bulbs are first in line for banning 2012!

    Since when does America need to save on electricity?
    There is no energy shortage, there are plenty of local energy sources, Middle East oil is not used for electricity generation.
    Consumers - not politicians - pay for the energy used.
    Certainly it is good to let people know how they can save energy and money - but why force them to do it?

    OK: Does a light bulb give out any gases?
    Power stations might not either:
    In Washington state practically all electricity is emission-free, while around half of it is in states like New York and California.
    Why should emission-free Seattle, New York and Los Angeles households be denied the use of lighting they obviously want to use?
    Low emission households will increase everywhere, since emissions will be reduced anyway through the planned use of coal/gas processing technology or energy substitution.

    Also, the savings amounts can be questioned for many reasons:
    For a referenced list of reasons against light bulb bans, see onwards