The United States should shift away from setting standards that require new vehicles, electronics and household appliances to consume less energy because those rules rely on a “paternalistic” assumption that buyers can’t decide how to save themselves money, a prominent economist from the Brookings Institution and a Vanderbilt University professor of law, economics and management say in a new paper.
The paper, published this week by Ted Gayer, co-director of the economic studies program at Brookings, and Kip Viscusi, an economist at Vanderbilt University known for his research on cost-benefit analysis, calls for a new approach. The authors say it’s important to reduce pollution from energy use that harms the public, but people shouldn’t be forced to buy certain products when the costs and benefits — more expensive products in the short run, and energy savings in the long run — are purely private.
“The economic puzzle raised by all these energy regulations is why consumers are this remiss,” Gayer and Viscusi write. “How can it be that consumers are leaving billions of potential economic gains on the table by not buying the most energy-efficient cars, clothes dryers, air conditioners, and light bulbs?”
The analysis was published by the Mercatus Center, a think tank at George Mason University that is often critical of regulation. Still, for a paper co-authored by an expert at Brookings, a think tank with a reputation for centrism, its conclusion is surprisingly pointed: “Perhaps the main failure of rationality is that of the regulators themselves.”
It is a sign of the shifting debate over energy efficiency standards, long an area of general agreement in Washington.
For decades, the federal government has set appliance standards through the Department of Energy and fuel economy standards through the Department of Transportation. Under the Obama administration, U.S. EPA has joined DOT in setting far stricter miles-per-gallon rules for cars and trucks, using the authority granted by a Supreme Court ruling that told the agency to decide whether man-made greenhouse gases need to be regulated for their role in climate change.
Similar appliance standards have historically found bipartisan support. Energy laws signed by President George W. Bush in 2005 and 2007 ordered DOE to ratchet down the energy use of appliances and create the first-ever standards for many types of electronics.
But within the past few years, efficiency standards for consumer products have become a point of contention on Capitol Hill, with critics — mainly Republicans — questioning why the government should decide which products can be sold.