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Freakonomics: Should we pay for our trash?

Overflowing trash bins

TEXT OF INTERVIEW

KAI RYSSDAL: It's that time now for a little Freakonomics Radio. It's that moment every couple of weeks where we talk to Stephen Dubner, the co-author of the books and the blog of the same name. It is about the hidden side of everything. Dubner, always good to have you back.

STEPHEN DUBNER: There is no place I'd rather be.

RYSSDAL: All right, I don't believe that. But anyway, so I was in New York a while ago, a couple of months ago, came by your apartment, and you had me do this thing that was actually rather disgusting. Let's roll some tape here.

RYSSDAL: All right. I have brought my latex gloves. So this won't hurt a bit. Let's go out and look at your trash. We have flowers. We have...

DUBNER: Those were my wife's...

RYSSDAL: OK. I'm sorry. Seriously, on the top of the recycling thing is a little Dewars Scotch, White Label.

DUBNER: Now aren't you glad at least I recycle? But Kai, don't you think we should at explain to the people why you were actually going through my trash here?

RYSSDAL: We should. We had some time to kill on the Upper West Side of Manhattan and... No, no. You had this thing about trash and the economics thereof, right?

DUBNER: Guilty as charged. Here's the thing. Trash is a gorgeous illustration of what you call the free-rider problem. A lot of us just take our trash for granted. We stick it out on the curb -- voila, it disappears.

RYSSDAL: Except we pay for it, right? It's either in our property taxes or it's in our water bills. I mean, it's not like it's free free.

DUBNER: Right. It's not free free, but the fee is hidden. And moreover the fee is a flat fee, which means I get to throw away as much trash as I want. So why bother to produce less? If my electricity bill were a flat fee every month, I would never turn off a single light in my house. Listen to Lisa Skumatz, she's an economist at a consulting firm that helps cities deal with their trash.

LISA SKUMATZ: Makes me think about an all-you-can-eat buffet. As in, all-you-can-throw-out trash with no incentives for people to think about the cost of what they're doing.

Now for 25 years, Skumatz has been working with a model called "Pay-as-you-throw," which forces people to put their money where their trash it.

RYSSDAL: Yeah, they have it actually here in parts of L.A. It's the more you put on the curb, basically, the more you pay.

DUBNER: So you're kind of at the center of the boom and it has been a big boom. A few years ago, 20 years ago, you go back, fewer than 200 places in the U.S. had "Pay-as-you-throw." Now we're up to about 7,000 or about a quarter of the country. So a trash consultant like Lisa Skumatz, she loves it. Now that people are paying for what they toss, their behavior changes. And here's the best part: If you're in government, "Pay-as-you-throw" makes it easy for you to start billing directly people for trash pick-up. So bingo, new revenue streams. Sounds pretty win-win, right?

RYSSDAL: Yeah, if you're in the mood of giving the government your money. But OK, go ahead.

DUBNER: Exactly. Some people, as you could intuit, are a little bit less than thrilled by it.

MARK GREEN: Oh yeah, I'm sure there are effigies of me hanging from numerous places in people's houses.

That's Mark Green, who's the town manager of Sanford, Maine. Sanford introduced "Pay-as-you-throw" last July. People had to pay $2 for every big purple, "Pay-as-you-throw" bag of trash. It worked great. Trash volume was cut in half. But some people there in Sanford, like Len Mustacchio, they thought the idea stank.

LEN MUSTACCHIO: Anything that's a fee, might as well be a tax. It's one and the same. You don't have a choice. Although they'll tell you, 'You do have a choice, you can throw out less garbage.' Well what am I supposed to do? Eat it?

So in November, the voters in Sanford repealed "Pay-as-you-throw."

RYSSDAL: Yeah, so Dubner, get me to the hidden side of this. I mean, incentives matter, right? If you tax, essentially trash, what happens?

DUBNER: Well, you've got to understand, incentives matter. And the people who design them think they know how people are going to respond to them. But the fact is, they don't. You introduce an incentive and people respond to it in a way that benefits them. So with the trash tax, yes. A lot of people might pay dutifully. Some towns like Sanford, Maine, might repeal their tax. And other places, they'll do things like in Ireland, there was a spike in emergency room visits for burn victims because a lot of people started burning trash in their backyard to avoid the new tax. This is kind of where economics and psychology hook up. If you're accustomed to getting something for free, and then you're asked to pay for it -- even if it's just a couple of bucks -- you might get really unhappy. Like if all of a sudden, I started charging you, Kai, a dollar every time you said the word "Freakonomics" on the radio.

RYSSDAL: OK. So you know what, you actually wouldn't be on the radio very much. That's actually what would happen. But we will bring you back again in a couple of weeks. That's Stephen Dubner, "Freakonomics Radio."

DUBNER: One dollar right there. One dollar right there.

RYSSDAL: I know, right? FreakonomicsRadio.com is his website. Two dollars. See you in a couple of weeks.

DUBNER: My pleasure, Kai. Thanks.

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It may be all fine, well and good to tax the consumers as one touchpoint in the flow of waste. But where is the discussion on taxing the producers of such waste? Creating incentives at the source has shown more powerful promise.

Mr Dubner is incorrect that garbage is a "hidden fee' and Mr Ryssdal is incorrect that the fee is "either in our property taxes or it's in our water bills." While this is true in many locations, in many others, perhaps a majority of American cities, residents are billed, usually monthly, for garbage collection services. Sometimes this is a "flat" monthly fee and sometimes it is user based. But the sweeping generalization about "hidden costs" is simply incorrect. In addition, waste collection for garbage generated by businesses and multi-family housing is also billed monthly and is usually based on the size of the collection container behind the business or apartment house.

I was a little disappointed by this segment, for a discussion of economics, it only talked about the demand side of trash disposal, why not talk about the supply side?

If consumers would consume less, bring their own containers/bags to restaurants and stores, and find ways to reuse their trash rather than recycling/throwing it out, then there would be less demand to throw it out.

When you reduce the demand to throw trash out, you reduce the price of throwing it out.

I also did not like how Mr. Mustacchio's comment when unaddressed. A fee is not a tax in disguise. Disposing of trash is a responsibility, that responsibility starts with the person who disposes the trash, so if you throw out more trash, then you are responsible for more disposal. That means that you should be charged a bigger fee for your actions.

Producing and disposing of trash indiscriminately is not a civil right.

We've grown too complacent with curbside trash removal, people think that trash simply disappears and it won't be anyone's problem once it leaves their curb. Obviously, that is wrong, the trash needs to be carted away from the city, which requires resources (gasoline especially), and then it needs to be dumped somewhere, which requires land. Furthermore, once trash gets to the landfill it is still a responsibility. Landfills are cesspools of debris and chemicals that can be accidentally released into the environment, there are preventative measures to address those problems, but they sometimes fail.

So, again, what we need to do is reduce our consumption, that will save money, save resources, and it will help save our environment.

PAYT (Pay as you throw) makes sense to a point. Many of us pay for the size of the garbage cart, but receive recyclable carts/pickup & yard waste carts/pickup for "free". As we work to compost more and get that "garbage" down to zero, we've got to realize that it still costs money to pick up the recyclables & the yard waste. If I didn't have any garbage, I'd still have recyclables & yard waste, and someone (me) will have to pay for that. We're probably going to get to a point where we pay a certain amount for each cart we put out for pickup, regardless of what's in it.

Silly Americans always get confused.
If you add a fee or a tax, they can smell it a mile away.

If you give a "discount" or a "tax break" for it, and they'll walk a mile for that dollar.

for an example, take the health care reform. people see it as a health tax. McCain's proposal was to "give you" $5000 off your payroll tax to buy insurance. Or take the tax credit for contributing to your retirement acct for low income people. Same thing but presented differently/effectively.

Take that freak+economics.

I love the idea of pay as you throw. My neighbor uses a giant bin per week and I barely fill half my bin in several weeks because I choose to recycle. Our trash bills are the same,

In Oregon communities have garbage and recycling collection service provided by private companies - this means you get a monthly bill from this company, as with any service provided you pay for what you get. The more you use it the more your charges are. Communities need to understand that this is no different than receiving a municipal water bill.

The only reason Mr. Dubner's economics of trash is Freaky is he left out half the equation: unless the cities eliminate taxes that supported the trash collecting service before the pay-as-you-throw program, citizens are being charged twice and have a legitimate beef.

i try to be good with regards to what i throw away. i recycle where i can but i refuse to pay to get rid of all the extra garbage that's mailed to my home and can't be recycled or the ridiculous amount of redundant packaging found on products. (toothpaste boxes, really?) if this ever came into play, i will start to open my purchases right there in the store and leave the packaging behind! i should do that anyway....

Matt, whereas in some areas like San Francisco, recycling and composting are prevalent, in others they are not. Where my MIL lives, she has to pay to recycle. Whenever we've visited her, we've taken some recyclables home with us, but we can't get it all. In liberal areas, people are able to recycle a lot, but in some areas, there are not enough people who care to increase the recycling and decrease the trash created.

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