NEW STUDY: One Government Subsidy It's Not Crazy To Turn Down

Study challenges idea that consumers are irrational when they pass up federal subsidies to weatherize their homes.

Energy efficiency has long appealed to political leaders trying to combat climate change without hurting their economies. It holds out the promise of policies that both reduce fossil-fuel consumption and save consumers money.

The rationale is that consumers are shortsighted in failing to insulate their homes or buy a more efficient appliance, and should be “nudged” in that direction.

But a new study challenges that premise. The study of households who received federal subsidies to “weatherize” their homes found the efficiency investments cost far more than they save. So consumers may not be irrational when they pass up such investments: the programs simply aren’t as beneficial as their promoters think.

CLICK GRAPH to ENLARGE

The paper has important implications for current efforts to reduce planet-warming emissions of carbon dioxide. Energy efficiency programs are politically popular but may be far more expensive than mechanisms that rely on price signals. These include carbon taxes (admittedly, a political non-starter) or tradable emissions allowances, one of the options available to states for meeting proposed new federal limits on greenhouse-gas emissions.

Read the rest of the story HERE.

If you like what you see, please "Like" us on Facebook either here or here. Please follow us on Twitter here.