Posted in UCLA Today.
This op ed ran originally on July 29, 2011 in the Christian Science Monitor.
In Japan today, there an increasingly urgent effort to conserve on electricity consumption. While most economists would suggest that the price mechanism could be used to discourage use (see Frank Wolak's study), an alternative strategy is peer pressure, "shame and ostracism" and relying on guilt. UCLA scholars have been studying how UCLA students respond to information about their relative electricity consumption to see if our impressive students can be nudged to change their behavior.
But, back to Japan. Here is an impressive quote from the NY Times article:
"In the Tokyo area, the government is pushing to cut electricity use by 15 percent between 9 a.m. and 8 p.m. on weekdays to prevent blackouts — and on Thursday, for example, that target was met compared with last year.
Japanese are bringing to the conservation drive a characteristic combination of national fervor, endurance, sloganeering, technology and social coercion.
A "Super Cool Biz" campaign, which builds on the option of no-tie summer business attire begun in 2005, now encourages salarymen to dress down even further by wearing polo shirts or the traditional aloha-style shirts worn on the Japanese tropical islands of Okinawa.
To back up the call to conserve, electricity reports that forecast the day’s power supply and track demand in real time have become as much a part of this summer as the scorching sun and humid air. They are delivered along with the weather on the morning news and announced along with the next stop aboard some trains. Government alerts are also sent to subscribers’ cellphones if overall demand nears capacity, prodding households to turn down the air-conditioner or, better yet, turn it off altogether."
This adherence to "good behavior" impresses my inner-Chicago economist. Why aren't these individuals free riding? The economics of identity literature would say that sacrifice for a worthy cause provides direct pleasure and that during a time of crisis that individuals are willing to sacrifice such as volunteering for the army rather than draft dodging.
It has been pointed out that in the United States that few people pay more to the government than what they owe on their taxes. Do Americans do fewer "good deeds" than other people? What is it about Japanese culture that they may reach conservation goals without explicit pricing incentives?
This article highlights that conservation has real costs! "Offices here, already balmy by American standards, have been directed to set the room temperature to 82.4 degrees Fahrenheit, though the real temperature, especially on hot days, has climbed above 86 degrees in many offices." Would Al Gore and Joe Romm put up with that?
Economists have not done a great job investigating the willingness to sacrifice to achieve social goals. Right now in the midst of our budget debate, it appears that everyone wants a free lunch and nobody wants to sacrifice for the common good. Are the Japanese better people than we are?
I recall that Casey Mulligan has published a JPE paper arguing that during World War II that Americans were willing to accept lower wages to work and lower interest rates to hold U.S Treasury Bills as these costly actions helped the War effort.
This is an example of sacrifice during a time of crisis.