September/October 2008 Editorial: Libertarian Paternalism and Saving Energy
Those days may look good in hindsight, or not, depending on your experience. But might a little government paternalism be some help in solving our energy problems nowadays? If you google the phrase “libertarian paternalism” you will find a lively discussion about the meaning of it and its implication for public policy and government programs. I confess that six months ago I didn’t know what libertarian paternalism was. So let’s start with a definition: the phrase describes an economic belief that the government can find and help you make the choices you would make for yourself but don’t because you lack the strength of will and the sharpness of mind to do so. Advocates of this policy typically use insurance or retirement plans as examples. Many of these plans require employees to actively opt in. Few do. Instead, the libertarian paternalism approach would automatically enroll people in these plans, but allow people to opt out. The overwhelming majority of people, the logic goes, will not bother to opt out. But the existence of an opt-out option satisfies groups that would ordinarily oppose—and sometimes block—government-mandated policies.
So what does libertarian paternalism have to do with saving energy? It appears in unexpected ways. Consider Energy Star’s specifications for flat-screen TVs. Unlike older models, the power consumption of a flat-screen depends on the level of brightness. Manufacturers typically ship TVs with their brightness set at maximum. Consumers don’t know how to reduce brightness (and certainly don’t know about the connection to power consumption), so they live with excessive brightness for the life of the TV. Energy Star wisely required manufacturers to ship Energy Star-compliant models with brightness set at mid level. Few consumers will notice and even fewer will bother to reset them to higher brightness levels. That’s easily 75 watts saved per TV for thousands of hours per year. Of course, if the customer wants it brighter, he or she can read the users manual and opt out of this energy saving mode.
There are other situations where factory-adjustments could have long-term impacts on energy use, such as the temperature setting for water heaters, powering down set-top boxes after 4 hours of no use, and enabling power management enabled PCs. This strategy works for some devices but I can’t imagine a way of opting out of a more efficient motor or thicker insulation. Still, nobody has considered a policy of aggressive energy efficiency requirements combined with opt-out provisions where possible across the whole range of appliances and energy-related regulations.
There are obvious drawbacks, too. Manufacturers and installers often set temperatures, brightness, and other features at maximum so as to minimize callbacks. And there will be more callbacks with more aggressive efficiency requirements. But manufacturers can anticipate them by re-designing the products so that products perform better at the energy-saving level (or by increasing staffing at telephone hot-lines).
I’m not convinced that adopting libertarian paternalism will accomplish significant energy savings, but perhaps it has a role in some energy policies, especially where progress has been impeded by political stalemates. If we are serious about reducing our energy use by a large amount, then we need to be creative, take chances, and then change course if the strategy fails. If we don’t, then perhaps father does know best, and we need to legislate in the energy savings. After all, he was right about turning off the lights to reduce the electric bill, wasn’t he?
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