The “make-work bias” meets energy policy
Posted by Rich Sweeney on November 13, 2007
Last week I attended an Environmental and Energy Study Institute (EESI) event at the Hart building on “Green Collar Jobs”. The event was co-sponsored by the American Solar Energy Society, which was presenting its study on how many jobs energy efficiency and renewables would create in the US over the next 25 years. The answer? 40 million new jobs by 2030.
Now this “study” was about as rigorous as the Power in the Public Interest electricity deregulation paper the NYTimes cited last week. When I saw the title for the talk, I naively assumed that said study would involve some sort of macro model, with efficiency and renewables supply curves and labor explicitly defined as a factor input. Clearly, as the tone of this post indicates, I was mistaken. Yet what I really want to talk about today is not the shortcomings of the ASES study, but the fact that nobody at the briefing cared. Among the attendees were Senate Energy Committee member Ken Salazar and Washington Director for the State of Ohio Drew McKracken. Despite the glaring lack of substance or specificity, both felt compelled to loudly tout the study as justification for the renewables and efficiency spending bills currently being pushed through Congress. In The Myth of the Rational Voter, Bryan Caplan lays out four systematically biased beliefs held by the non-economist voting public. One of these, which Caplan dubs the “make-work bias”, refers to the populace’s tendency to underestimate the economic benefits of conserving labor. In the polls, this bias often manifests itself in voter’s overemphasis on jobs rather than welfare. The result is a suboptimal welfare outcome.
Now I’m not saying that this is exactly the same thing, but I’m becoming increasingly concerned about labor hijacking the energy policy debate. I thought that the primary motives for promoting renewables and energy efficiency in the US were to reduce GHG emissions and alleviate our dependence on foreign oil. Yet if you go to an energy event on the Hill or read the energy platforms of the leading presidential candidates you’d think the main concern was about jobs. Worst of all is the fact that, as far as I know, there hasn’t even been a credible study of the employment effects of these policies. While it seems straightforward that the large expansion of the renewables and efficiency sectors should increase their employment, its not at all clear whether this creates new jobs or simply displaces labor from other sectors. (Amusingly, accountants and bookkeepers were by far the largest component of the ASES jobs from renewables estimates.)
Ok, I’m sort of running out of steam here, so I’ll just summarize my main points:
1) Energy and environmental policies should focus primarily on energy and environmental objectives. Especially given the severity of our current climate change and foriegn policy concerns. At the EESI event I honestly heard a woman get up an ask how the ASES study had a accounted for prison inmates. Letting the word “green” precede every partisan action item confuses the issues and significantly limits our ability to address the two real concerns at hand.
2) To read one of Thomas Friedman’s lighter columns or listen to John Edwards’ energy stump speech, you’d think the labor implications of the climate change debate were perfectly clear. As far as I can tell they’re not. Does anyone want to co-author a paper?