Economists: always surprising

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I'm always surprised by economists and the things they come up with. If you've ever read Freakanomics, you'll be aware of the exciting trends they can uncover (abortion as the cause of reduced crime in the US, etc).

But they can also devise some extremely clever ways of encouraging certain behaviours and discouraging others. Take carbon trading: it's worth billions already and is encouraging industry to become greener using the motivation of large profits for those who are environmentally friendly. Carbon taxes, currently being argued about by all the main UK political parties, are a way of discouraging environmentally unfriendly behaviour.

The most clever green proposal I've seen is to discourage electricity suppliers from charging per kilowatt, but instead to provide a warm, well-lit house as a service, to be delivered in whatever way the supplier deems necessary:

“People aren't fussed about how much power they buy,” explains Philip Sellwood, chief executive of the trust. “If energy suppliers sold a service – a lit and heated house, rather than units of gas or electricity – then they would face incentives to provide it as efficiently as possible.” In theory, such companies would even pay to improve their customers' homes, cutting their own costs in the process. One is already operating in Woking, a green-minded town; another is planned to start in London.

See? That's clever.

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This page contains a single entry by Rob Buckley published on October 30, 2006 9:17 AM.

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