Californians, If They’re Like the Rest of America, Have Already Answered

The majority of Californias Have Decided.

“California Needs to Decide if it Wants Low Carbon or Low Gasoline Prices.”

That’s the title of an article published by the “Energy Institute at Haas,” part of the University of California, Berkeley.

It’s by James Bushnell, a professor of economics at UC Davis who earned his Ph.D. in Operations Research. The article is here.

First, as co-blogger Pierre Lemieux would be quick to point out, the article is mistitled. “California” can’t decide anything; it’s not a sentient being.

But Californians, if they are like most Americans–and they may not be–have already decided.

In his long article, Bushnell talks about the tradeoffs between low gasoline prices and low carbon usage. But, unless I missed it, he doesn’t give the reader a sense of how much Californians would have to pay to reach the ambitious targets set by the California Air Resources Board (CARB.) My sense is that it’s very expensive.

But maybe Californians are willing bear a large expense to cut carbon usage, right?

Wrong.

In “68% of Americans Wouldn’t Pay $10 a Month in Higher Electric Bills to Combat Climate Change,” Cato at Liberty, March 8, 2019, Emily Ekins, vice president and director of polling for the Cato Institute, presents a graph a that tells a lot. Part of it is in the title of her piece. And $10 a month has to be a substantial underestimate. The cost of having some perceptible influence on world temperatures would almost certainly be at least $100 per month. Only 16% of people surveyed would be willing to pay that much.

While Bushnell doesn’t give us cost numbers to compare with the numbers in the survey, in a much earlier article, Robert P. Murphy did. He cited an MIT study that found that a generic cap and trade program would cost $3,100 per average household. As Murphy pointed out, although the MIT professor strongly objected to the cite of his number, he didn’t deny it. Rather, he argued, because the revenues would be rebated to people, the net cost per household would have been “only” $800 per year. As Murphy noted, though, for that to be true, the revenues would have to be rebated in an efficient way. Does that sound like the government you and I know?

But let us assume, against virtually all evidence, that the government did distribute the revenues efficiently. A sum of $800, when this MIT professor wrote (say in 2008), adjusted by the Consumer Price Index, would have been $950 in 2019, when Emily Ekins wrote. That’s $80 per month. Only 15% of people surveyed would have paid $75 per month.

So, again, unless Californians are much different from other Americans–and unless Californians have changed a lot on this issue in 5 years–James Bushnell can rest easy. The majority of Californians have spoken.

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