Tuesday, August 31, 2010

An Enlightening Example

Chapter 1 of my favorite textbook talks about how policies can have unintended consequences because of their effects on incentives.  One example I use is Sam Peltzman's famous study of seatbelt laws.  Here, from The Economist, is another example:
SOLID-STATE lighting, the latest idea to brighten up the world while saving the planet, promises illumination for a fraction of the energy used by incandescent or fluorescent bulbs. A win all round, then: lower electricity bills and...less climate-changing carbon dioxide belching from power stations.
Well, no. Not if history is any guide. Solid-state lamps, which use souped-up versions of the light-emitting diodes that shine from the faces of digital clocks and flash irritatingly on the front panels of audio and video equipment, will indeed make lighting better. But precedent suggests that this will serve merely to increase the demand for light. The consequence may not be just more light for the same amount of energy, but an actual increase in energy consumption.