Freakonomics Radio

Freakonomics: Saving the environment, or just showing off?

Stephen Dubner Apr 19, 2011
Freakonomics Radio

Freakonomics: Saving the environment, or just showing off?

Stephen Dubner Apr 19, 2011

Kai Ryssdal: It’s time for a little bit of Freakonomics Radio, that moment every couple of weeks where we talk to Stephen Dubner, co-author of the books and blog of the same name, it is the hidden side of everything. Dubner, welcome back.

Stephen Dubner: Thanks Kai. You know, I’ve got a burning question. I was wondering, what kind of car do you drive?

Ryssdal: OK, one: why? But two: I have four kids, man — I drive a minivan.

Dubner: And what do you think that minivan says about you, Kai Ryssdal the man?

Ryssdal: It says I’m unbelievably lame, that’s what it says. I’m not how I used to be.

Dubner: I would argue to counter that. Let me say this: The fact is that we drive what we drive in some part to tell the world who we are. Some people may want to show that they’ve got a lot of money. Some people want to show they care a lot about the environment. Or in your case, that you’re a good family man.

Ryssdal: And proud of it, but go ahead.

Dubner: A lame family man, but proud about it. And now, there are other ways to signal the world who you are, obviously, not just a car. I want you to listen to Tim Harford, who’s an economist and author from London.

Tim Harford: The British Prime Minister, David Cameron, when he was leader of the opposition — he was trying to get elected — he wanted to convince people that he was a soft, caring guy and he installed a little windmill on his house. Now, it turns out wind power can be pretty effective. But you need a really, really big windmill in a really windy location to be efficient.

Ryssdal: Sounds a little bit like politics over power generation, right? Because you’re not getting a lot of wattage out of that little thing?

Dubner: Not a lot of wattage, but he did get elected, right? Whether the windmill was responsible, it’s impossible to say. But if nothing else, Cameron showed off some behavior here that you have to call “conspicuous.” And economists love conspicuous behavior. You go back to Thorstein Veblen a century ago, who coined the phrase “conspicuous consumption,” which we all know means that you spend money in order to show off your wealth, right? Cameron, though, was spending money to show off something else — he wanted to show off his environmental bonafides. Now, economists have a name for this, too, which is “conspicuous conservation.”

Here’s how a young economics researcher at Berkeley named Steve Sexton describes it.

Steve Sexton: A sort of “Keeping Up with the Joneses”-type concept but applied to efforts to make society better. I will be competing with my neighbors to donate to a charity, for instance, or to reduce energy conservation or environmental impacts.

Ryssdal: We’ve all seen these people, right? They’re the compact florescent light bulb folks, they are the bring your own bag into the grocery store — all stuff trying to save the planet.

Dubner: That’s right. Now the economist Steve Sexton, I have to say, has a twin sister whose name is Alison, who’s also a young economist. Now these young twin Sexton economists just did a very interesting study where they looked at who buys a hybrid Toyota Prius, and why.

Ryssdal: Out here, by the way, everybody buys them. And even Toyota says they’ve just sold their millionth, right?

Dubner: Right. The Prius is the king of the hybrids. Now it’s not necessarily because it’s better than other hybrids; according to the Sextons, it’s because the Prius has this unique shape which screams “hybrid,” which screams “I love the earth more than you love the earth.” Now, if you live in a community that cares a lot about the environment — somewhere like Boulder, Colo. — that’s worth something.

Here’s Alison Sexton.

Alison Sexton: The Prius market share increased disproportionately in greener communities relative to other hybrid cars.

Dubner: So there’s your “conspicuous conservation” effect. And the Sextons estimate that buying a Prius can be worth a few thousand dollars to people in terms of their green self-image, and new friends, even better job opportunities, depending on where they live.

Ryssdal: I say this at no risk to my own job opportunity here, Dubner, because many people at Marketplace, well a couple anyway, have Priuses. But could it be, is what I’m hearing you saying, that driving a Prius is all about making yourself look good rather than actually saving the planet?

Dubner: Well it could be. You can’t climb inside people’s minds. But you can see what they do, and what people do is often a little on the silly side when it comes to conservation, including putting solar panels on the front of your house to show the neighbors, even if that’s the shady side of your house; it’s not going to generate a lot of power. But people do that. Now this Friday is Earth Day, Kai, and I’m guessing if you look around, you’ll see all kinds of conspicuous conservation happening. Which on the one hand you could say, it’s nice that people care. On the other hand, the problem is that can crowd out more worthwhile conservation ideas, things like just putting better insulation in your house. But it’s hard to show off the insulation to your neighbors, not very sexy.

Ryssdal: Yeah, no, nothing sexy about that. You on the other hand, well, that’s another conversation. Stephen Dubner, our Freakonomics Radio correspondent. is the website. Dubner, we’ll see you in a couple of weeks.

Dubner: Thanks for having me, Kai.

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