People respond to incentives. That’s probably the most powerful lesson a study of economics provides. It appears to be trivially true but it is quite surprising how often that is neglected by policy makers, analysts, and indeed by the average guy on the street.
Fortunately, every so often you do come across happy examples of properly designed incentive mechanisms that elicit the desired (and expected) behavior from the public without the need for authoritarian meddling. An item in businessGreen.com reports that a combination of charges and loyalty points have reduced the use of plastic carry bags at some retailers by as much as 85 percent. (Hat tip: Kashyap Patel)
Since launching a 5p charge for food bags last May as part of its Plan A scheme to reduce waste, Marks & Spencers says the number of bags taken to cart posh ready meals home has fallen by 80 per cent, from 460m bags a year to 80m. . .
“We are really pleased at how quickly customers have reacted and adapted their shopping habits by investing in durable alternatives in which to carry their purchases,” said the National Trust’s Stuart Richards, adding that in the trust’s shops, sales of reusable jute bags have soared as plastic bag use has fallen away.
. . .
Retailers who have incentivised customers to reuse bags have also seen success. Tesco, which offers one Green point to its clubcard customers for every bag they reuse, says it has cut bag use by 50 per cent since it launched the scheme in August 2006, saving three billion bags in the process.
Good to see that a market mechanism is being used there, as opposed to silly schemes at banning the use of plastic bags as they attempted to do in Maharashtra. I have visited that issue before on this blog and recommended a small user charge. Please see the post “Banning Plastic Bags” (Sept 2005), and “Monkey See, Monkey Do: Plastic Bag Version” (Feb 2008).
I will end this with a quote from the Sept 2005 post on the matter:
Practically every problem we see around us admits a market solution. Get the incentives right and the market will figure out the most efficient way of solving the problem. On the other hand, banning is the strategy of the failed Nehruvian ideology of command and control. It will not work and will make matters worse. They will encourage corruption and bribery. The police will use the ban as a baton to beat the shopkeepers with to extract even more than they already do.