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Brooks Wilson's Economics Blog: Light Bulbs

Monday, May 23, 2011

Light Bulbs

Governments face daunting yet ignored difficulties imposing efficiency standards on markets.  They presume to have the knowledge and foresight that producers and consumers acting in markets lack.  Hayek called this presumption the fatal conceit and famously wrote, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

The government’s imposition of energy standards for light bulbs illustrates the fatal conceit.  I believe that their thinking went something like this.
Edison’s incandescent light bulb is more than 100 years old.  When lighting the bulb, more energy is lost to heat than used in light.  Certainly, it would be easy to make lighting more energy efficient.  We will require bulbs to be 30 percent more efficient by 2014 and 70 percent more efficient by 2020.
In 2007, the Congress passed and President Bush signed legislation with this energy requirement and since that time manufacturers have had problems meeting new standards.  Compact Fluorescent Lights (CFL’s) cost more, don’t last as long as promised, and pose a small environmental hazard.  Light emitting diode bulbs (LED’s) are very expensive and will remain expensive even after production costs fall and competition increases.

Elected officials do not seem to realize that consumers pay attention to cost, both the purchase price and operating cost.  I own a minivan rather than an SUV because it gets better gas mileage.  My wife and I recently considered buying a bigger home.  We considered the extra energy and water cost of maintaining the home.  Manufactures have a profit incentive to provide products with characteristics that consumers desire and if consumers want energy efficient products, they will get them.

If our elected officials believe that energy consumption results in a negative externality, they should tax it and not establish “command and control” regulations like those imposed on light bulbs that are fraught with inefficiencies.  Faced with higher costs for electricity, the interaction between buyers and sellers will efficiently determine the lowest cost method to consumers for lowering the consumption of electricity. 



  1. Morgan Heeke3/7/11 11:16 PM

    I support that the government should tax energy consumption. It would first, help us with our debt and would also give people incentive to consume less energy. It is common for people to leave on lightbulbs and not think twice but if people know they must pay more, they will save energy. Therefore, the demand would decrease, then causing a shift in supply. We have tried other measures to consume less energy, but this is a method we haven't tried.

  2. Brianna Martinka1/9/11 2:25 PM

    A light bulb is one simple thing that helps man kind. It's a crazy thing that the CFL's cost too much, don't last as long as promised, and they even cause an environmental hazard?!
    Maybe if people were more careful with their lights, like not leaving them on when not needed, then maybe it wouldn't be such an issue. Many things like light bulbs, that are so small in a human life, but also so important, and we don't think about it, so we don't really care about it. I, honestly, try not to use any light during the day no matter what I'm doing because the sun light is enough for me. I also think that if more people went outside and used the sun light more instead of light bulbs, then maybe people wouldn't be making such a big deal about light bulbs. Even school can open windows, and turn off the lights while students are working on an assignment or something closely related.
    Also, I don't know so much about the taxing of the energy consumption, but I could guess the government would have to try it first before I gave an honest opinion on it.