Tuesday, March 31, 2009

Hmmm: Freakonomics

Tonight, I'm just reposting an article from Daniel Hamermesh's Freakonomics blog for the New York Times.

The actual post is available here.

Seems most people take serious issue with his hypothesis (as you'll note from the comments section). What do you think of what he proposes?






I fell for a stupid article and turned off my home PC last night. The article says that Americans who leave computers on overnight are wasting $2.8 billion on energy costs per year.

It ignores the cost of turning computers off — and having to turn them on again the next morning. Let’s say that process takes five minutes per day, and one does it 250 days per year. That’s 1,250 minutes, or more than 20 hours per person per year.

Assume the average computer user’s wage is $21 per hour, and take the old estimate that time is valued at one-third of the wage. So each person’s time per year turning his/her computer off and on is worth 20 x $7 = $140. I’m being conservative and assuming only 50 million U.S. computer users. That gives a cost of turning computers off/on of 50,000,000 x $140 = $7 billion, which is 2.5 times the alleged savings from turning computers off. Even if people’s time were valued at only $3 per hour (less than half the minimum wage), leaving computers on would still make sense.

This story is yet another example of environmental savings uber alles — that saving $1 in environmental damage is worth much greater costs incurred along other dimensions. These stories assume explicitly — or, more usually, implicitly — that people’s time has no value.

But time has value because it has an opportunity cost. Stories like this and exhortations for environmental do-goodism hurt the environmental movement, because in the end, people realize that heeding these exhortations would actually waste resources (even though some, like me, take a day to catch on!).

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