Gernot Wagner's Blog, page 14

A Humane Commuting Society

Scene: Crowded subway car during morning rush hour.

Conductor: For your safety and the safety of passengers around you, please do not block the doorway.

General indignation and eye-rolling among passengers.

Exasperated conductor: Step all the way in. Move to the center of the car. You are delaying the train for every passenger.

More eye-rolling. A few knowing smirks—including by the "offender," who just wants to get to work on time.

One passenger: Run them more often so they aren't as crowded, jackass.

Laughter and smiles all around—and you know that's not easy on a subway, in New York, at 8 in the morning.

It's not quite as simple. The crumbling New York City subway system is largely running at capacity during rush hour.

Here's one possible approach for a more humane commuting experience:

Charge drivers for the congestion and pollution they cause.
Remove free parking everywhere in the city. It's not free to you, if it takes you 20 minutes to find a spot. It's not free to the city, if they can't use the space for something else. It's not free to anyone around you either, if that parking spot acts like viagra for cars: increase the number of "free" parking and watch cars multiply.
Use the money to invest in more and better subway cars, tracks, and other amenities (free WiFi?) that make you want to take the train.
Build more and better bike paths for those who like to save money and burn fat, rather than the other way around.

If you dare, add another:

Charge a congestion fee for the subway: At 8 a.m., they cost twice what they cost now. At 7 a.m. and again at 10 a.m., they are almost free.

Just don't do any of these without the others. Transport is a system and requires a systemic approach. And it all starts with getting the incentives right.

A look to the future

Happy 8 months, young man.

Yesterday's accomplishment: smile and utter a clearly audible (and possibly even intentional) "Hiiii," eliciting a broad smile from the homeless man on the subway sitting across from us.

Guilt by location

As seen on the streets of Washington, DC:

The building between Exxon and The Heritage Foundation: intern housing. (They typically don't feature the gas station in their brochures.)

Then again, the entire block is on Massachusetts Avenue Northeast.

In unrelated DC lobbying news: AARP, really?!

This membership card came the same day as a reminder that I hadn't yet RSVPed for my ten-year college reunion. I could have sworn I did. Perhaps I am getting senile.

Smart builder

Really enjoy reading your stuff.

I am about to build a 6 story building in the Lower East Side, and while I realize it will not make any difference I am interested in installing solar panels and other energy saving devices.

"Thanks for reaching out. You are right, of course, that turning your building green won't stop global warming, but you are also showing that incentives work. If everyone asked these questions, it would surely make a dent — for the planet and for your bottom line. I'm no expert on green building initiatives, but I'd reach out to the US Green Building Council: www.usgbc.org"

I found a company… They claim to help building owners reduce costs and move towards green.

They were talking significant savings.

Incentives at work.

Efficient gaming

Wasting time Playing games online is fun. Even staid old utilities are catching on by now.

In truth, ConEd didn't come up with much of a game. It's more like a guided tour of energy savings around your house, even though the link may say "play now."

Other companies, however, are designing real online games. oPower is famous for getting households to decrease their utility bills by telling them how they are doing compared to their neighbors. It was only a matter of time for oPower to take things to the next level and let friends compete with each other on Facebook.

It doesn't get much better than that: save electricity and money, while playing games online.

That's indeed amazing. oPower manages to decrease electricity bills by around 2%, and all it takes is sending out a bill with a smiley face if you are better than your neighbor.

Of course, all you get in exchange is a 2% decrease.

That's quite a bit for a letter with a smiley face, but it still points to the need to get prices right in the first place and ensure that we pay the appropriate price for the other 98%.

Paper with plastic

And I thought buying a reusable metal mug was the right thing to do. Or at least refusing the sleeve!?

If you are going positively crazy trying to do the right thing, you should be.

Thankfully, regular reader Mike Piskur is keeping a cool head. He sent in this picture from Chicago.

I trust that he doesn't attempt a full life-cycle assessment of paper cup, plastic cover and paper sleeve versus metal mug every day before getting his first cup of coffee, because, well, it doesn't make a difference.

Summed up over millions or billions of decisions every day, however, it does matter. A lot.

There's only one way of ensuring that we all make the moral choice in this case: Make sure that the prices of paper, plastic, and metal all reflect their true costs—from cradle to grave.

Rational to a fault

Here's the classic economic view of your car-purchasing behavior: You walk into a dealership, choose a car based on brand, color, cylinders, looks and general feel and then start comparing prices among different options. And you don't just look at how much you pay to drive home with the car, you also include all likely future expenses. You look at maintenance costs and might decide that paying a bit extra for a Mercedes is worth the upfront expense because it tends to break down less often than the Yugo next door. You also look at gas mileage, today's price per gallon, form an opinion about future gas price trends, attach probabilities to them, calculate expected total gas costs over the lifetime of the car, balance all of that information against expectations over future inflation rates and interest paid were you to just leave your money in the bank, take into account how your preferences for driving will evolve over time, make a few assumptions about how future buyers will perceive your choice when you are ready to sell the car, and do all that and probably a few things I'm missing, while the car salesman at the dealership explains to you the awesome industry-leading warranty and zero-down loan program offered through the end of the month.

To be fair, no sensible economist really thinks this is how you buy a car. Individuals make mistakes, focus on the wrong things, and manage to remember only some of the points that they should, as they are lulled by the dealer's promise of the free child seat with any car bought with the DVD player and nine-inch screen built in for the little one. It's just that on average car buyers behave as if this model holds.

It's easy to make fun of the "rational" economic model. Of course, no one does these things in real life.

In my book, I cite a working paper by Hunt Allcott and Nathan Wozny, who try to measure to what extent people behave "irrationally." In theory, car buyers ought to be "willing to pay one extra dollar in vehicle purchase price to decrease the expected present value of future gasoline costs by one dollar." You'd expect drivers to think every dollar is worth 100 cents no matter where they find that dollar. They don't.

In their working paper, Allcott and Wozny found that car buyers only pay 61 cents for every dollar of gas saved. You can look at this number and talk about the failures of the rational model.

Or you can look at this and say that the zombie-economic, rational model gets us 60% to the true answer. Not bad for something whose assumptions no one believes.

Allcott and Wozny have since re-run the numbers. Their latest figure: 72 cents.

7 billion, and counting (more slowly)

Happy 7th billion! The United Nations Population Division has picked today as the symbolic day when the world population reaches 7 billion. Twelve years ago, we marked 6 billion. Twelve years before then, in 1987, it was 5 billion.

These two numbers alone are indicative of an important trend: The rate of increase in global population is slowing down. It's easier to add another billion if you already have 6 on the planet than with a mere 5, yet it took us as long to add the 7th as it did to add the 6th billion.

Still, for some that decrease isn't coming nearly quickly enough. They point to (over)population as the real environmental menace: If only there were fewer people, the planet would be just fine, or so they say.

There's something to this. Seven billion have a larger environmental footprint than 6 or 5. Sensible population policies—giving women the freedom, education, and means to make their own decisions about how many children they want—need to be part of the picture.

But the combined footprint of the richest billion still dwarfs that of the large rest, especially the bottom 3 or 4 billion. There's no escaping sensible climate and environmental policies.

Lastly, population raises the most fundamental of all questions: Why are we environmentalists? Is it for the love of the planet, or for the love of people? As you can gather from the picture of my 7-month-old, I have pretty much answered that question for myself.

Nature accomplishes what politics won't

A freak October snowstorm blanketed New York yesterday, likely setting a new October snow record.

In the meantime, Bangkok is trying to cope with one of the worst floods in history.

Standard journalistic decorum demands that I mention right about now that no single freak weather event can be attributed to global warming. Except that by now, that's no longer the case: Last year's Moscow heat wave, for example, was caused by global warming "with a likelihood of 80 percent." And overall trends for extreme events are pointing up and up.

Ironically, freak weather events like the New York storm and the Bangkok flood accomplish what politicians can't: They limit pollution in their own special ways. The New York storm left a million people without power. The Bangkok floods caused Ford, Toyota, and Michelin among many others to suspend operations at their Thai plants.

How many more extreme weather events will it take for us to realize that it may be better to have an orderly decrease in emissions through predictable laws rather than wildly disruptive natural disasters?

Feeling is believing

The facts on global warming are clear. We are shooting straight toward a cliff and may already be over the edge. But no three-year-old believes the plate is hot until she burns herself at least once. Turns out the rest of us—even the most educated among us—are often no different.

One possible approach: make sure people experience what it's like to live on a warming planet rather than reading about it.

The trick, of course, is to have people experience the effects without living through them in real time, when it's likely too late.