The rational consumer myth

I got this from Ezra Klein

I can’t find the article on the Mother Jones web site, but the new issue has a piece by Paul Roberts (author of the terrific book the End of Oil, and the forthcoming “End of Food”)on the 7 Myths of Energy Independence. In it, he makes the point that one of oil’s great advantages is that it exists in a sort of economic isolation. If you use more oil, you don’t have less of anything but oil. Trying to replace oil with another energy source, however, has huge, rippling impacts. Biofuels, like ethanol, mean you suddenly have a whole lot less corn, which means you have less food. Windmills mean a lot less land, whole most solar strategies are chemically intensive. In other words, nothing really exists as an easy swap, because ramping up to a full energy economy will have huge, and possibly unexpected, impacts downstream. The only strategy that doesn’t gave this particular tradeoff is conservation, but since that’s neither very exciting nor obviously profitable, you’re seeing relatively little in the way of coordinated efforts to cut — rather than replace — energy usage.

The last sentence summarizes the problem nicely, no one makes money off of conservation so it is not encouraged. I know you free market zealots are going to argue that consumers can save money by conserving and they will realize this at some point and start spontaneously conserving energy. It has not happened yet, partially because people who have incentive to keep people acting against their own best interests have large marketing budgets and perhaps the idea that consumers are rational is a myth. Markets while they may be good for making money, might not always produce the best outcome for everyone involved. This is true in health care where the marketing efforts of big medicine overwhelm any idea someone has about thier own health. The same thing seems to happen with big oil and their ability to make conservation a dirty word.

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