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nudges and financial incentives

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  • Simon Norton
    In the middle of Dr Avineri s article was a statement that there was a synergy between nudges and financial incentives. I think that this needs greater
    Message 1 of 3 , Jun 1, 2009
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      In the middle of Dr Avineri's article was a statement that there was a synergy
      between nudges and financial incentives. I think that this needs greater
      emphasis. Relying entirely on nudges is a strategy which I call "it pays to
      pollute", in antithesis to a policy based on financial incentives which I call
      "polluter pays".

      The "it pays to pollute" strategy is supposed to work by incentivising the
      producers of energy efficient services (such as transport) by enabling them to
      collect more from consumers. I believe that it is palpably not working.

      In newspapers we constantly see letters with themes like "we are supposed to be
      being encouraged out of our cars, but..." which show that people are often very
      good at seeing through such strategies.

      On another point, the article mentions the name of Sunstein. This is, I assume,
      the author of "Worst Case Scenarios", reviewed in the London Review of Books 10
      Apr 2008. The reviewer, Jeremy Waldron, expresses his disappointment with the
      book. His main points are that the book ignores distributional problems, even
      though the author has elsewhere shown his awareness of this issue; and in
      condemning the Precautionary Principle, by which one avoids new and uncertain
      risks until one can be sure that the relevant threats are low, it generalises
      from the Iraq war to climate change, though I'd say (and would have said some
      years ago) that both the gravity and the likelihood of the threat from the
      latter were greater by several orders of magnitude.

      Simon Norton
    • Richard Layman
      as long as the fundamental externalities are not addressed, in the case of mobility behavior, the cost of gasoline, and the addition of appropriate taxes to
      Message 2 of 3 , Jun 1, 2009
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        as long as the fundamental externalities are not addressed, in the case of mobility behavior, the cost of gasoline, and the addition of appropriate taxes to cover all of the costs not covered strictly by the materials cost, and possibly and likely free parking, every program to promote optimal mobility is never going to achieve optimal results.
         
        If gasoline in the U.S. was priced comparable to that in Europe and if parking cost money, everywhere, rather than mostly just in cities, and couldn't be subsidized except in ways where it wasn't favored the way it is now,  E.g., in U.S. law employers can provide $20/mo. to bicyclists and something over $200/mo. to drivers, it would force land use and transportation planning and policy to be far more congruent than it is today.
         
        As long as we talk about adding choice etc., we won't get anywhere substantive.
         
        Where transit works better without appropriate costing of gasoline is where there is a robust transit system/network, proximity of jobs and housing, density, and probably higher cost housing and higher cost accommodations for cars, all combining to make transit both an economically and time efficient choice.
         
        DC avers that transportation costs for non auto owners is $9500 and for auto owners is double that.  I don't think that's correct, as my household (2 adults) easily spends less than 1/2 that not taking into account my gf's transit subsidy from work (max. value = $1440/year).  But the Planning director's point is that every $10,000 you don't spend on transportation supports $100,000 in mortgage.  So sure, we pay more in housing, but for non car owning DC residents our combined housing + transportation cost is still less than the 50% of HH income that is typical in the U.S.
        I think having gasoline cost more than $6/gallon in the U.S. because of the addition of excise taxes would be far more than a nudge...
         
        A nudge is cash for clunkers, which shows how far we are from understanding the interconnected issues of our economy and policies.
         
        RL


        --- On Mon, 6/1/09, Simon Norton <S.Norton@...> wrote:

        From: Simon Norton <S.Norton@...>
        Subject: [NewMobilityCafe] nudges and financial incentives
        To: newmobilitycafe@yahoogroups.com
        Date: Monday, June 1, 2009, 12:30 PM

        In the middle of Dr Avineri's article was a statement that there was a synergy
        between nudges and financial incentives. I think that this needs greater
        emphasis. Relying entirely on nudges is a strategy which I call "it pays to
        pollute", in antithesis to a policy based on financial incentives which I call
        "polluter pays".

        The "it pays to pollute" strategy is supposed to work by incentivising the
        producers of energy efficient services (such as transport) by enabling them to
        collect more from consumers. I believe that it is palpably not working.

        In newspapers we constantly see letters with themes like "we are supposed to be
        being encouraged out of our cars, but..." which show that people are often very
        good at seeing through such strategies.

        On another point, the article mentions the name of Sunstein. This is, I assume,
        the author of "Worst Case Scenarios", reviewed in the London Review of Books 10
        Apr 2008. The reviewer, Jeremy Waldron, expresses his disappointment with the
        book. His main points are that the book ignores distributional problems, even
        though the author has elsewhere shown his awareness of this issue; and in
        condemning the Precautionary Principle, by which one avoids new and uncertain
        risks until one can be sure that the relevant threats are low, it generalises
        from the Iraq war to climate change, though I'd say (and would have said some
        years ago) that both the gravity and the likelihood of the threat from the
        latter were greater by several orders of magnitude.

        Simon Norton


      • Michael Yeates
        Relatively far too much carrot (for cars mainly but also trucks) ...? ... relatively too little carrot (for walking, cycling and public transport and
        Message 3 of 3 , Jun 3, 2009
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          Relatively far too much carrot (for cars mainly but also trucks) ...?

                            ... relatively too little carrot (for walking, cycling and public transport and combinations thereof) ...?

                                              ... but almost none of the necessary stick ...?

          One implementation problem/dilemma with the "carrot and stick" concept is that it seems to imply a reference to negativity (rather than to positive consequences) and to stubborn donkeys (us perhaps?) ...!

          At one level, it seems the problem is in essence one more example of subsidising if not idolising excessive consumption based on too much wealth in the hands of relatively far too few ... such that "willingness to pay" and other loaded economic research "tools" are biased in favour of discrimination favouring those who can afford to pay but taking little notice of the exclusionary ie discriminatory effects of those who can't afford to pay or who choose not to (eg those who choose public transport, walking, cycling, etc).

          That is a whole political problem of rapidly disappearing principles of "democracy" and/or equity ... but of relevance in any global comparisons or discussions.

          But perhaps this can be illustrated by asking why not put up the cost of fuel and of parking when needed, these being two easily identifiable elements that are directly related to (excessive) car/truck use ... but relatively "never" increase the cost of public transport?

          But then I hear GM is aiming to sell the manufacturing of the HUMMER to China ...!

          Anyone else read the book "Beijing Jeep" ?

          MY.....................

           At 05:29 AM 2/06/2009, Richard Layman wrote:

          as long as the fundamental externalities are not addressed, in the case of mobility behavior, the cost of gasoline, and the addition of appropriate taxes to cover all of the costs not covered strictly by the materials cost, and possibly and likely free parking, every program to promote optimal mobility is never going to achieve optimal results.
           
          If gasoline in the U.S. was priced comparable to that in Europe and if parking cost money, everywhere, rather than mostly just in cities, and couldn't be subsidized except in ways where it wasn't favored the way it is now,  E.g., in U.S. law employers can provide $20/mo. to bicyclists and something over $200/mo. to drivers, it would force land use and transportation planning and policy to be far more congruent than it is today.
           
          As long as we talk about adding choice etc., we won't get anywhere substantive.
           
          Where transit works better without appropriate costing of gasoline is where there is a robust transit system/network, proximity of jobs and housing, density, and probably higher cost housing and higher cost accommodations for cars, all combining to make transit both an economically and time efficient choice.
           
          DC avers that transportation costs for non auto owners is $9500 and for auto owners is double that.  I don't think that's correct, as my household (2 adults) easily spends less than 1/2 that not taking into account my gf's transit subsidy from work (max. value = $1440/year).  But the Planning director's point is that every $10,000 you don't spend on transportation supports $100,000 in mortgage.  So sure, we pay more in housing, but for non car owning DC residents our combined housing + transportation cost is still less than the 50% of HH income that is typical in the U.S.
          I think having gasoline cost more than $6/gallon in the U.S. because of the addition of excise taxes would be far more than a nudge...
           
          A nudge is cash for clunkers, which shows how far we are from understanding the interconnected issues of our economy and policies.
           
          RL


          --- On Mon, 6/1/09, Simon Norton <S.Norton@...> wrote:

          From: Simon Norton <S.Norton@...>
          Subject: [NewMobilityCafe] nudges and financial incentives
          To: newmobilitycafe@yahoogroups.com
          Date: Monday, June 1, 2009, 12:30 PM

          In the middle of Dr Avineri's article was a statement that there was a synergy
          between nudges and financial incentives. I think that this needs greater
          emphasis. Relying entirely on nudges is a strategy which I call "it pays to
          pollute", in antithesis to a policy based on financial incentives which I call
          "polluter pays".

          The "it pays to pollute" strategy is supposed to work by incentivising the
          producers of energy efficient services (such as transport) by enabling them to
          collect more from consumers. I believe that it is palpably not working.
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