Sunday, February 19, 2012

Light bulbs. Again.

Apparently, since the light bulb bill was delayed a bit, we're back to going around and having discussions about it. I just had one such discussion with my father on the phone while I was ambling through the grocery store.

We were talking about my massive gig for GE (which I'll write about later, or you can check out at, and he asked me if we interviewed anyone from GE's light bulb department about what they think about the "stupid" Republican plan to try to stop the laws mandating higher efficiency in lighting - thereby essentially making incandescent bulbs illegal in favor of CFLs and other such technology.

I proceeded to explain that - on this issue - the Republicans were not the stupid ones, and that what actually matters here is time-preference. When I got home, I composed a follow-up email on the subject that I'd like to basically edit & share here.

For starters, I had to point out that I actually already made a video on Regulatory Capture, and that it covers exactly what is going on with the light bulb bill, in a bill that appliance manufacturers supported 10 years ago with washing machines:

More importantly, the relevant missing piece - as I said - is time-preference:
" large a premium a consumer places on enjoyment nearer in time over more remote enjoyment."
To pull from Human Action, there's this passage:
"Time for man is not a homogeneous substance of which only length counts. It is not a more or a less in dimension. It is an irreversible flux the fractions of which appear in different perspective according to whether they are nearer to or remoter from the instant of valuation and decision. Satisfaction of a want in the nearer future is, other things being equal, preferred to that in the farther distant future. Present goods are more valuable than future goods. [p. 484]

Time preference is a categorial requisite of human action. No mode of action can be thought of in which satisfaction within a nearer period of the future is not--other things being equal--preferred to that in a later period. The very act of gratifying a desire implies that gratification at the present instant is preferred to that at a later instant. He who consumes a nonperishable good instead of postponing consumption for an indefinite later moment thereby reveals a higher valuation of present satisfaction as compared with later satisfaction."
This is all basically to say that most people would rather have whatever goods & services they need (including/especially money) sooner rather than later if at all possible, and that the more immediate need you have of something, the more this is the case. Conversely, the less immediate need you have of something and the more stable your income, the lower your time-preference tends to be, and the more open you are to long-term acquisitions.

As a result, I would add to this one fairly important thing. People who are rich tend to have a far "lower" time-preference for all goods and services than poorer people.

My parents are - for the purposes of this discussion - "rich". So am I, in the grand scheme of things. That's not to say that they've got a giant pile of money or a bunch of beach-houses, but they can (and do) afford expensive light bulbs.

What this means, is that my folks have revealed their time-preference as valuing long-term savings over short-run cash-flow through their own purchasing habits. That's fine for them, of course... That's one of the perks of having more disposable income. But other people do not - and sometimes cannot - have the same preferences.

Some people need more money in hand today, and cannot actually afford to think about how much they may save 10-20 years into the future, or even 10-20 months into the future for that matter. So light bulbs are a perfect microcosm of this and a great teaching-example for time-preference as far as I'm concerned, because here we have two very obvious real-world choices to use.

These options might look something like this.
  • Option A: 60W Incandescent bulb, $0.50 (according to Amazon today). Average lifespan: 1,000 hours. $0.005 per hour
  • Option B: 60W "equivalent" CFL; $12.99 (again, Amazon). Average lifespan: 10,000 hours. $0.001299 per hour.
[Note: It's been brought to my attention via the comments that the 4-pack of incandescent light bulbs I originally found on Amazon for $2.00 no longer exists. I'm guessing this is because it was possibly on sale, but I'm not sure... So, as an alternate calculation using Feb. 20th, 2012 prices at Home Depot's website might include these 60W bulbs at $0.66 each which supposedly last 2,000 hours, against this dimmable 60W equivalent CFL at $8.47 with a lifespan of 8,000 hours.

That'd be $0.00033 per hour of light vs. $0.00105875 per hour of light... which ironically means the 60W incandescents are actually more efficient in this alternate case.

The commenter also challenged my use of dimmable CFLs rather than the much less expensive non-dimmable varieties, but my response reiterated below is that if we're comparing capability to capability, incandescents can be dimmed and even as a kid I had a dimmer switch in my own bedroom, so I think it's valid to want the bulbs to be able to do the same jobs.]

Obviously, [original] "Option B" is cheaper in the long run. Ok. Fine. No one would argue otherwise.

But... So what?

For my folks - who are, again, rather rich in relation to our examples here - $12.99 isn't a big problem in the short term. For someone who's poor, however, it really is. Especially when we might not actually just talking about one bulb, but perhaps we're talking about outfitting an apartment or a house full of light bulbs.

My mom is a teacher, and she teaches in a particularly low-income school district and many of her students are extremely poor.

So I asked her to imagine that one of her students' parents had 5 light bulbs burn out in a week in the apartment she recently moved into. It's not an impossible scenario, and we all know that the landlord isn't going to replace any light bulbs them for her.

Who thinks our hypothetical poor mom can afford to pay $2.50 [or $3.30] for 5 new incandescent bulbs? Probably she can, sure.

However... Can she afford to pay $64.95 [or $42.35] for 5 new CFLs? I doubt it.

Hell... Even if they were not the dimmable kind (which as far as I'm concerned means that they're not actually "equivalent" anymore) and they were only like $4.00 a bulb - which is what I paid the other day - that's still $20 instead of $2.50.

Moreover, does anyone really think that the marginal benefit of saving $5.00 over 10,000 hours of light bulb life is worth it to someone who can barely afford groceries? Who cares if the light bulbs are cheaper over the life of the bulb if the consumer can't afford to buy them in the first place?

But my dad claimed that fighting against legislation dictating light bulb efficiency and restricting consumer choices was the equivalent of preventing progress and keeping people "in the dark ages" with their old-fashioned light bulbs.

He really did say that.

In what universe, though? As far as I can tell, it's the laws conscripting people into paying higher prices for light bulbs, for cars, for energy across the board, which are the things that move us back to the literal dark ages in that they make access to indoor lighting much harder for the poorest people in society.

And of course, these laws all tend to originate from A. companies that stand to profit a ton from forcing people to buy more expensive products (companies very much like Phillips and GE), and B. comparatively rich people (like my dad) who are wealthy enough to make their first priority energy efficiency rather than immediate short-term cash-flow when lighting their homes.

These kinds of laws, little by little, remove people's ability to choose for themselves what they most value, and make it harder for the poorest people to maintain their current standards of living.

So the biggest joke of all is that the people supporting these kinds of laws actually tend to think they'll be good for poor people as they'll "save money" in the long run... But not to be overly blunt here, if you support price controls, or any other policy that limits people's access to choice in markets, you are hurting poor people. Period.

So when we talk about who is pushing for the "dark ages", in this instance it is not people who want to stop these stupid laws. It's the people pushing to pass them.

It's bad reasoning and a poor understanding of economics which leads people to believe that their own personal value judgments and their own specific time-preferences are "right" and should be imposed on everyone else by force, but what actually ends up happening is these kinds of laws screw over the poorest people by forcing them to pay much higher prices for household goods that they otherwise would be able to afford.

THIS is why I care about economics. This is why I work for the Charles Koch Institute.

This is also why the type of conversation I had with my father actively irritate me.


Anonymous said...

You might want to check your Amazon links... the incandescent bulb is now listed at $5.55 each (and has not been below $3.52 in the past year- ). Also, cherry-picking the most expensive CFL bulb you can find harms your credibility. An 8-pack of 60W "equivalent" CFL bulbs can be had for $9.25 (, or about $1.16 each (less than 10% of the price quoted).

Your point would be the same using honest numbers, and it's one that I agree with.

Sean W. Malone said...

A. When I originally pulled that Amazon link, it was a 4-pack for $2.00. Guess that was a sale price of some kind... Not sure why that changed, but in any case, we're still talking about upwards of $1.35-$1.50 per bulb vs. $12.99

B. I did not "cherry pick" the most expensive bulbs I could find. In fact, I searched amazon for dimmable 60W equivalent and most came up in the $10-15 range.

Consider that I could pick this one:

The bulbs you linked to above are not only not dimmable (which makes them non-equivalent for our purposes), but they also have a shorter life-span (8,000 vs. 10,000 hours) than the one I used, which effects the calculation as well.

And of course, I did clearly say you can get them cheaper if you shop around, or if you go for non-equivalent non-dimmable bulbs.

Moreover, what we should really be talking about here in any case is a cost comparison between bulbs you'd find at a local grocery store (where most people are buying light bulbs), and those are going to be a hell of a lot more expensive than the bulk ones you find online.

At Home Depot, for instance, you can get a 6-pack of 60W incandescents for $3.97 (, which is $0.66 per bulb.

Alternatively, you can get a single 60W equivalent dimmable CFL for $8.47 (

I stand by my numbers.

I also stand by the much more important argument, which is that it should be up to individuals to decide what lighting options they value most, and not have some faceless bureaucrat dictating what they can or cannot use in their homes.

Sean W. Malone said...

Also, there's nothing in the cost-calculation I've done that accounts for the added danger of the chemicals in CFL lights, or for the arguably poorer quality of lighting that some people find incredibly obnoxious and headache inducing.

I actually don't have that problem, but I do have a problem as a film-maker and photographer with limitations on light bulb options.