If Banning Incandescent Light Bulbs Saves Money, Is It Good Public Policy? No.

A response by "Angus" to the article: Should Governments Ban the Incandescent Lightbulb?.

I likewise agree, but something to consider:

“EnergyAustralia says by using just one 15-watt compact fluorescent bulb instead of a 75-watt standard bulb, consumers could save about $10 a year.”

For most consumers, this may represent a $150 saving over the year. Data from the 2001 Australian census showed that average household income in capital cities was $57,000.

This means that the savings represent something in the order of 0.2% of annual household income. At this small level, it must be questioned whether most households would optionally switch over to the CF bulbs. Most households would need the push that the government is currently giving to make the switch. I agree that economically, it might not be the most optimal way of achieving the switch, but I think at the end of the day, it is possibly the most appropriate to bring about swift changes - achieving lower emissions swiftly will be key to achieving long-term environmental goals.

The impact of the switch (the financial savings) are not huge to the individual under current electricity rates etc., but the savings to the environment as a result of millions of households making the switch are indeed suggested to be significant.

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Thanks for the response, Angus!

I do not disagree with your math; it does appear that for many consumers, switching to CF lightbulbs may represent a $150 saving over the year. This is not an insignificant amount of money! But why are they not making the switch? It must be because either:

1. They are unaware of the savings.
   
   
2. They are aware of the savings, but still prefer incandescent light bulbs.

I'm willing to accept that the problem may be one of information. In that case, I refer you to the policy proposal I made in Should Governments Ban the Incandescent Lightbulb?:

There is an argument to be made that consumers are uninformed about the cost savings of using CF lightbulbs and other energy efficient devices. That is an argument I can accept, and markets work best when all actors have as much information as possible. If that is the case, why not require manufacturers to disclose on their packaging how much electricity, in terms of dollars and cents, that their product uses in a year in normal operating conditions?

If consumers are fully informed, and still choose not to purchase CF light bulbs, then there is no real "savings" by instituting a ban, as consumers are choosing the goods and services that best suit their needs.

Again, I refer to Should Governments Ban the Incandescent Lightbulb?:

Some people genuinely prefer incandescent lightbulbs and are willing to pay for the externalities they cause. Why should they not be able to do so? Why should we take away their choice?

We could also save electricity and natural gas by banning stoves and ovens, and require everyone to eat cold food, such as sandwiches. But this would not be a "savings" in any real sense, as we are forcing people to make a choice which is sub-optimal for them.

I use nothing but CF light bulbs in my house, but some people genuinely prefer incandescent lighting, for whatever reason. Why should they not be allowed to use incandescent bulbs? It seems presumptuous to me to go up to them and say "No.. no.. you're clearly making a mistake by using incandescent lighting, as CF light bulbs use far less electricity", just as it would be for me to say "No.. no.. you shouldn't make a roast chicken tonight.. rather you should have a baloney sandwich as it uses less electricity to make".

Now, it may be that someone's choice of light bulb does impose costs on others, as the added electricity needed causes more coal to be burned and more GHGs and air pollutants to be emitted. But this isn't limited to lightbulbs - choosing the roast chicken over the baloney sandwich does the same thing. If the problem is that electricity rates do not adequately reflect this externality, then raise electricity rates.

As I stated before, I do consider air pollution and GHG emissions to be serious externalities. But banning the incandescent bulb is an economically inefficient and wholly unfair way of achieving that goal.