tag:blogger.com,1999:blog-2556307309509108391.post2216969038920877862..comments2023-02-14T08:32:05.734-04:00Comments on The Economics Anti-Textbook: Well-meaning policymakers and unintended consequencesAntiTexterhttp://www.blogger.com/profile/17975559825072265469noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2556307309509108391.post-39765994597316281052010-10-13T20:19:40.915-03:002010-10-13T20:19:40.915-03:00Ronan's comment is a good one. I'd first r...Ronan's comment is a good one. I'd first read a discussion of the 'rebound effect' regarding energy use in George Monbiot's book "Heat" (from p.61). (He refers to a paper by J. Daniel Khazzoom, "Economic implications of mandated efficiency standards for household appliances", Energy Journal, 1980, Vol. 1, 21-39.)<br /><br />As energy efficiency improves, there's an income effect, so more real income is available to spend on all things. There is also a substitution effect as the relative price of using energy-using things falls, so more is demanded. The net effect could be an increase in energy use. Hence, I guess the need to set overall caps on things like greenhouse gas emissions, rather than just focusing attention on increased energy efficiency.<br /><br />Ultimately, it's an empirical question. Hirschman's comments about 'the perversity thesis' that I quoted in the original post also suggest the same thing. So it's true, for example, that unemployment insurance does increase time spent unemployed, a kind of perverse effect that labour economists have measured. But one then has to consider how big that is and whether there are other offsetting beneficial effects of UI: eg. a better match with the next job due to the lessened need to accept the next job that comes along (an efficiency issue).AntiTexterhttps://www.blogger.com/profile/17975559825072265469noreply@blogger.comtag:blogger.com,1999:blog-2556307309509108391.post-57108112556624428462010-10-11T18:02:06.637-03:002010-10-11T18:02:06.637-03:00Interesting. One place I have come across similar ...Interesting. One place I have come across similar examples recently is in the push for greater energy efficiency in homes and in businesses in preparation for a looming energy shortage in the medium to long term, and as a quick way for helping the economy grow in the short term.<br /><br />However, many studies have shown that efficiency gains with regards to energy use are prone to the 'rebound effect' which means the lower energy useage is only a small term win. Instead, people invest their savings in another tv, another trip abroad, another car or another energy guzzling piece of equipment for their business. Over the long term, demand continues to rise and the energy problem remains unsolved.<br /><br />I think the problem of the rebound effect stands to reason and presents huge problems for policymakers. However, they seem, at present, to be happy with the short term wins, and leaving the longer term issue of increased demand to next round of politicians to deal with. This kind of short termism is a key reason why policies aiming at some social problem fail to grasb and deal with underlying fundamentals which provide huge problems when left unquestioned.<br /><br />Wilkinson's work on social inequality as a key underlying diver of social dysfunction highlights this point.ronanpeterhttps://www.blogger.com/profile/13375024006869462385noreply@blogger.com