Wasteful products

A relative of mine recently remarked that consumer products involving less waste (that is, less plastic packaging and so on) usually cost more. The same is true when you compare electric cars to petrol cars, and I’m sure you can think of many other examples. But are we missing something here?

Suppose I can choose between brand A and brand B for my purchases of some product, and both meet my purposes equally well. Suppose also that A comes with lots of plastic packaging and costs $10, and B does not, yet costs $13. If I don’t care about the plastic (both in its convienient or annoying effects on me, or its real or imagined environmental impact once discarded), it would be a bad decision to buy product B, at least on my side of the transaction. I could use the $3 saved by buying A for something else I need, or even donate it to the Against Malaria Foundation.

On the other hand, if we think that the harm caused by discarding this particular unit of plastic packaging is worth the sacrifice of the $3, then purchasing B would be the right decision. In order to really decide, we would somehow have to know the extent of this impact and to what extent someone does value it, or ought to value it (that is, weigh it against the benefits of the $3). This is the kind of situation that Economics 101 usually presents with its solution of a Pigouvian tax to offset the external cost, but in my story I’ve put that decision in the hands of the purchaser (Economics 101 doesn’t usually mention the fact that the people setting the level of the tax might not have every incentive to do so accurately, if it is even possible to define that).

However, here’s a tempting line of reasoning that I think is wrong. We should buy product B because it’s less wasteful, in that it takes fewer resources to produce. Just look at the wasteful packaging A has and B doesn’t have! But this neglects the fact that the price is conveying information about things we could rarely learn in all their complexity, such as how valuable the alternative uses are of the resources that went into producing A and B. If B is more expensive, then it is very plausible that it takes more resources to produce it. Perhaps it takes some scarce specialised ingredient, or highly skilled labour (which also has alternative uses), etc. I am reminded of a time a friend lamented the tremendous resources going into producing plastic cutlery, which is so resource intensive that you can buy huge packets of it for a few dollars. If plastic cutlery were truly ridiculously wasteful, you’d be having trouble budgeting for it and find the need to cut back. But most people don’t have to worry that much about their plastic cutlery expenditure.

In the long run it would be exciting if electric cars became cheaper than petrol ones, but for now they aren’t, which means they almost certainly are taking more resources to produce. The external costs here might justify the difference, and many people make that case (more catastrophic views of climate change would imply this, while it’s-one-issue-among-many views would not). But the case isn’t made by pointing at the lack of a tailpipe and forgetting to weigh that against the thousands of dollars at the other end of the transaction. Similarly, if a kind of paper costs twice as much, a business it putting itself at slightly higher risk of going bankrupt by purchasing that kind of paper. Ironically, pursuing environmental sustainability at any price (literally) can mean both wasting more resources and making activities less sustainable.

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About Brendon J. Brewer

I am a senior lecturer in the Department of Statistics at The University of Auckland. Any opinions expressed here are mine and are not endorsed by my employer.
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