econlife - The City That Has to Keep Its Garbage by Elaine Schwartz

In a section of Southwest Alaska, as big as the state of Illinois, you can visit Bethel. A city of 6,500 people, it is the area’s metropolis. For medical care, for shopping, Bethel is where you go. Nearby, 56 Alaska Native tribes live in small groups of several hundred or so.

Visiting Bethel is not quite so easy. Because it is located on a subarctic tundra wetland with a network of ponds and streams, it never connected to the state’s road system. Instead, the only way to access the city is by plane or boat and sometimes a truck when the river is frozen.

You can see that Bethel is in the middle of a lot of water:

The necessities do come in. Cargo planes and barges bring their food, medicine, and cars. However, moving anything in the other direction is the problem. Except for people, little leaves Bethel.

Garbage Problems 

It’s too expensive and too inconvenient to ship garbage out of Bethel. So it stays there.

A typical backyard has piles of junk. There are oil drums, wooden pallets, all sorts of items under large tarps. At the landfill, you can find the spare parts you need from the refrigerators, the stoves, and anything else that was abandoned.

To all of this we can add weather conditions that are especially unkind to local roads. The ice that freezes, melts, and then refreezes creates an unimaginable number of potholes and cracks and heaves. The result?  Hundreds of dead cars. Vehicles have been left on roads, in public parking lots, and especially at the airport.

Our Bottom Line: Incentives

So yes, in Bethel the incentives can be unusual. You place your junk in your backyard. You abandon your dead car. And the taxi cab business is thriving. At 59, Bethel has (reputedly) one cab for every 110 people because people prefer not to drive their own cars in bad weather and the city’s visitors need a cab when they arrive by plane or boat.

Some say that our incentives on the earth could be more similar to Bethel than we realize. We just do not see our junk piling up.

My sources and more: Thanks to 99% Invisible for the story of Bethel.

Our featured image is from Travis through Flickr.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - The Unintended Consequences of Plastic Bag Bans by Elaine Schwartz

When I walk with my friend Eli and her dog Dosa, we take our plastic bags. Originally from ShopRite or the local farm stand, the bags were filled with groceries. Now, handy for dog poop, they reside in a bin under my sink until I grab one.

In more than 240 U.S. municipalities, California, and soon New York, those bags have disappeared. Because of bag bans or bag fees, many fewer people are re-using them.

And that could be the problem.

Plastic Bag Ban Surprises

Through a DCB (disposable carryout bag) fee or a ban, we shop with many fewer lightweight plastic bags. Because paper bags and fabric totes replace them, our plastic waste plunges by millions of pounds.

But there is a problem.

Those paper bags and fabric bags have a substantial carbon footprint–more than what it took to make the DCBs. Just think of how a tree becomes paper. You are eliminating an environmentally benevolent plant, using toxic chemicals, and then doing some hefty processing and transporting. It gets even worse with a tote bag. To have a smaller global warming impact than a DCB,  your cotton bag has to be reused more than 131 times. Then, if those DCBs had become garbage hags at home, you have to use your tote as much as a whopping 393 times to offset a DCB’s global warming potential.

These are the amount of use numbers from a 2006 U.K. study that compared the global warming potential of DCBs (aka HDPEs) to reusable bags:

Furthermore, when there are no DCBs, we need more plastic garbage bags. Using data from California, one researcher reported a surge in demand for four gallon garbage bags while sales of other sizes also increased. The result was a massive consumption shift as we bought 11.5 million more pounds of garbage bags and used 40 million fewer pounds of DCBs.

You can see the pop in garbage bag sales just after the DCB ban:

At this point you could be thinking there’s got to be more and there is. We just have to look beyond the carbon footprint from greenhouse gases. When we consider all of the waste generated by plastic, we could arrive at a new conclusion. As always in economics, we have tradeoff. A ban creates more emissions but less non-biodegradable litter.

So, if you care about non-biodegradable litter, then the DCB ban is for you.

Our Bottom Line: Pigovian Taxes

A bag ban or fee could be called a Pigovian tax. Arthur Pigou developed the idea to cope with negative externalities. Defined as the harm done to an uninvolved third party when, for example, someone plays loud music in a dormitory or pollutes a stream, a negative externality needs an incentive to discourage its use. Dr. Pigou said the solution was a tax. When something becomes more expensive, people do less of it.

On a graph, the higher cost looks like this:

Bag bans and bag fees create a higher price. That price might not be in dollars but they do necessitate some costly inconvenience.

My sources and more: This Planet Money newsletter had all we need to know about the downside of the plastic bag ban. But for more detail, this paper and this U.K. study look more precisely at ban “leakage.” Lastly, the NY Times showed the regulatory side through New York’s new bag fee.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - When Awards Give Us More or Less Than We Expect by Elaine Schwartz

An award solved a problem at German Wikipedia. It had been typical for someone to write only one article.

But then they created an award. People who wrote multiple entries got a special badge printed on their profile page. Their names were also listed near the award’s description. While the recognition had a benefit, the cost to Wikipedia was minimal. Before it existed, 35% of their writers submitted another article. Afterwards, 42%.

For Wikipedia, an award did what it was supposed to do. Others have not.


Awards That Backfire

In one study, students who got a “perfect attendance award” subsequently diminished the days they went to school. Researchers have hypothesized that the recipients realized it was okay to do less. They concluded that awards should not honor what you are supposed to do.

At econlife, we’ve written about Olympic medal winners. Of course the gold medal winners are the happiest but so too are the bronze recipients. However, many silver medalists are not quite as ecstatic. The reason? Because the gold was their focus.

Recipients could also be unhappy when too many awards are given. We might call this phenomenon award inflation. Or, you might devalue an award when giving it to people who don’t deserve it. If a recipient is a friend, family, or someone getting unearned adulation, then the award loses some of its credibility.

Funny Awards

Sometimes a “fake” award can make fun of the real thing and still generate admiration for the recipients. Halle Berry received a Worst Actress Golden Raspberry (a Razzie) for her performance in Catwoman (1/4 from Roger Ebert; 3.3/10 from IMDb ). During an acceptance speech that mimicked the Academy Awards, she warmly thanked Warner Brothers and all the people it takes to create so bad a film.

If you are a fan of The Office (as am I), you will enjoy this Dundie award ceremony. For some smiles, do take a look:

Our Bottom Line: Boosting the Market

Awards are a social experience. Group appreciation is supposed to inspire certain behaviors like community service or high grades. At work, management could be saying thank you for many years of service or the armed forces might want to honor bravery. Most Nobel Prizes are for scholarly achievements.

Because awards exist in social territory, they complement the market. The law of supply says we produce more when price climbs higher. But when cash is not enough, awards provide an extra incentive. Sort of like an energy bar, they give a boost to the market (and to German Wikipedia).

My sources and more: Thanks to Hidden Brain for an awards podcast that provided most of my facts.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - The Less Obvious Way To Conserve Wildlife by Elaine Schwartz

Last November it again became okay to bring elephant trophies from Zimbabwe and Zambia into the U.S. In March, the U.S. Fish and Wildlife Service extended the decision to other African countries and animals.

Did the U.S. increase the incentive to endanger threatened species?

Not necessarily.

Wildlife Conservation Incentives

To support wildlife conservation, Africa has experimented with different programs,

The CAMPFIRE Program

Zimbabwe figured that local communities had to support wildlife conservation. But the opposite was true because elephants and other animals threatened their crops, their livestock, and their safety. So almost 30 years ago they created CAMPFIRE through which local communities got the use-rights to wildlife. It led to partnerships with hunting groups, much-needed village revenue, and the incentive to increase wildlife populations. With new incentives, in CAMPFIRE areas, the elephant population doubled.

The U.S. Ban

When the Obama administration banned elephant trophies (heads, tusks, other body parts) from Zimbabwe, they reported a 30% decline in safari hunting. But there were reports of a 5-fold increase in poaching activity. With less revenue, the villagers cared less about wildlife preservation. Also, the funding for anti-poaching enforcement dropped.

Our Bottom Line: The Tragedy of the Commons

Whether it’s air pollution, an overgrazed pasture, or poached elephant ivory, we tend to abuse shared resources. People ignore what they destroy because they privately benefit from their behavior. The result is a tragedy of the commons.

CAMPFIRE is an attempt to solve the tragedy of the commons. So too are the community conservancies in Namibia and Mozambique’s privately funded Coutadas. The common thread is the benefit that villagers receive from hunting revenue and shared meat. By shifting wildlife from a public resource to one with private benefit, African countries have created the incentive to conserve.

They’ve also shown how sometimes a market can beat a ban.

My sources and more: I always look forward to Monday for the new Econtalk podcast. Yesterday’s discussion, a good listen, focused on wildlife conservation. It led me to the tension between market-based wildlife hunting and the Zimbabwe ban.

Please note that President Trump’s position on the trophy ban has become unclear.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.