Daniel Hamermesh is a very well established economist. This is why I was surprised when I came across this blog post on the Freakonomics blog, a blog created in 2005 as an extension of Freakonomics (one of my favorites books).
In the post, Hamermesh argues against an article that suggested leaving on computers overnight is wasting $2.8 billion in energy costs a year, in addition to creating unnecessary pollution. Hamermesh’s contention is that it’s actually better to leave your computer on overnight.
Hamermesh’s reasoning is that there are also costs associated with turning off and on your computer daily. He assumes that turning on and off your computer wastes about 20 hours a year per person for a conservative estimate of 50 million computer users. He then argues that even at earning $3 an hour (much less than the current minimum wage), you will be wasting money because $3x20x50,000,000 = $3 billion, which is greater than $2.8 billion. That is, the opportunity cost is higher because the time you take to turn on and off your computer is wasted time. He therefore concludes, “This story is yet another example of environmental savings uber alles — that saving $1 in environmental damage is worth much greater costs incurred along other dimensions. These stories assume explicitly — or, more usually, implicitly — that people’s time has no value.” He continues his attack on the article, writing, “Stories like this and exhortations for environmental do-goodism hurt the environmental movement, because in the end, people realize that heeding these exhortations would actually waste resources . . .”
Almost immediately you can see why this argument Hamermesh makes is completely specious (and many of the commenters make note of this). First, the idea that it takes fives minutes a day to turn off and on your computer is probably unrealistic. It takes just a few seconds to turn off your computer, and most computers in today’s age turn on in under five minutes. But that’s not really important. The biggest mistake is that Hamermesh assumes people do absolutely nothing while their computers turn off and on. Even more, he assumes people could be earning their normal wages during this time. That’s absurd.
A lot of people, including myself, do other things while they wait for their computer to turn off, like prepare breakfast, go to the bathroom, brush their teeth, shower, etc. (Also, it’s usually useless to keep your computer on overnight because you are sleeping and are unable to do anything. In fact, it’s probably rather costly because your computer likely has moving parts which can wear out through continuous use.) And most people do not have an opportunity to earn a wage during this time or simply prefer not to for obvious reasons. Still others may prefer to incur costs if the result is a lesser impact on the environment through using less electricity, for example. But that may not be for naught, as limiting environmental damage may have a benefit in the long run (e.g. minimizing the effects of global warming).
I think Hamermesh was just trying to find a way to attack the green movement, but resulted in a rather humiliating article. Reading his post, you sense he is a bit fed up with what he calls “environmental do-goodism.” Unfortunately, trying too hard to be anti-green may give you presupposed answers and result in shoddy economic analysis in attempts to support your presuppositions.
(Speaking of microeconomics, I plan on assessing the effects of a minimum wage on unemployment in an upcoming post, hopefully soon.)