Which is better — an electric car (like, say, the Nissan Leaf) or a gas-powered car (like, say, the Nissan Juke)? There are innumerable websites to help you decide, but an awful lot of them seem to repeat the same bizarre logic.
Take, for example, the comparison page at CleanTechnica. Here we have, in the pro-Leaf column:
The benefits to…public health as a whole from not emitting the pollution that would come from burning gas.
This is immediately followed by a cost comparison, which counts (again in the pro-Leaf column) the $7500 tax credit for electric vehicles.
Sorry, but you can’t have this both ways. My friend Alice believes that when you shop for a car, you should respond to the incentives you’re faced with, and not worry about spillover effects on others. She, therefore, cares not a whit for public health benefits, but is very impressed with that $7500 tax credit. My friend Bob, on the other hand, has a highly developed social conscience. He, therefore, is very much concerned with his neighbors’ health, but correspondingly reluctant to lift $7500 from his neighbors’ pockets.
The CleanTechnica page, then, is addressed neither to Alice nor to Bob, nor, apparently, to anyone else with a coherent philosophy, but only some moral schizophrenic who cares passionately about the state of his neighbors’ lungs but not a fig for the state of their pocketbooks.
I am not here (at least at this particular moment) to debate the merits of Alice’s philosophy versus Bob’s, or the merits of the Leaf over the Juke. I am here to talk about the merits of clear and consistent thinking. Please direct your comments accordingly.
What about Carol, who does not care about her neighbors, but does care about her children and their health? She would find both points pro-Leaf.
You’re missing the obvious explanation: the blurb is addressed to both Alice AND Bob. Alice won’t care about the one point; Bob won’t care about the other. But both will be more inclinclined to purchase a Leaf than they would be without that information.
“The CleanTechnica page, then, is addressed neither to Alice nor to Bob, nor, apparently, to anyone else with a coherent philosophy, but only some moral schizophrenic who cares passionately about the state of his neighbors’ lungs but not a fig for the state of their pocketbooks.”
Are we pretending that this doesn’t describe a typical leftist?
Have to agree with Nathan in comment one. Alice will look at the page and go “oh cool tax break”. Alice possibly buys. Bob on the other hand may (or may not) decide that the spillover effects of his reduced polluting outweigh the 7500 his neighbours now pay.
There is also Carla who is willing to do $1 damage to everyone else for 50 cents benefit to herself. Surely she counts the 7500 tax break as a 3750 net good and the reduced pollution as another positive?
Sadly we also have Donald who just hasn’t made the connection between “I get a tax break” and “Everyone else will need to make up what I don’t spend”.
“The benefits to…public health as a whole from not emitting the pollution that would come from burning gas.”
Where do they think the electricity comes from? Whilst electric cars have the potential to be powered from non fossil fuels, currently the electricity nearly all comes from burning gas or even worse coal. certainly any *increase* in demand from such vehicles will be so fuelled because renewable capacity is close to 100%.
From wiki:
“The EPA MPGe ratings displayed in window stickers do not account for the energy consumption upstream, which includes the energy or fuel required to generate the electricity or to extract and produce the liquid fuel; the energy losses due to power transmission; or the energy consumed for the transportation of the fuel from the well to the station”
There is a measure which includes this – the PEF (petroleum equivalent factor). This includes USA averages for fossil burning power plant generating efficiency (0.328), transmission efficiency (0.924) and petroleum refining and distribution factor (0.83). This would make the consumption of electric cars about 1/3 as good as the MPGe ratings – or pretty close to conventional fuel efficient cars. So from a total emission point of view, electric is similar to petrol. From a local pollution – air quality in cities point of view there are clear benefits.
However, in a strange twist, this figure is multiplied by a “fuel content factor” of 1/0.15, or 6.67. Why is this? It seems difficult to say.
The reasons are given in the document below.
http://www.gpo.gov/fdsys/pkg/FR-2000-06-12/pdf/00-14446.pdf
In summary, this is an incentive to indicate the benefits to the nation of not having all its transport eggs in one basket – reducing the dependency on liquid transport fuels. The particular figure was selected because it is what is used for other gaseous alternative fuelled vehicles “even though there is not an obvious technical basis for doing so.”
So the PEF figures end up in the region of 200mpg equivalent, nearly all due to the arbitrary valuation of the benefits of substituting alternative fuel for petroleum derived fuel is over 6 times the value of the fuel itself.
That aside, having looked at the page, the full quote is:
“Now, real quickly, here are some of the factors that are *not* being included in the cost comparisons below:
Pros
The benefits to your health, and public health as a whole, from not emitting the pollution that comes from burning gas.” (emphasis in original)
In other words, the health benefits are explicitly excluded from the cost comparison. Although as we have seen above, these benefits are not as great the author probably thinks.
Nicolas:
What about Carol, who does not care about her neighbors, but does care about her children and their health? She would find both points pro-Leaf.
I don’t think this works. The pollution from Carol’s one car will have only a negligible effect on her children’s health. To turn that into something worth caring about, you have to multiply by a large number of children affected — which means you have to care about your neighbors’ children as well as your own. But if you care about your neighbors’ children — and if you’re morally consistent — you’ll care not just about their health, but about their inheritances, which will make you reluctant to accept tax credits at their parents’ expense.
He did say “real quick-here are some of the factors not being included…”
I think the “real quick” and “some of the factors” makes it clear that this is not an exhaustive list of factors not considered. Sure, he didn’t include the costs to others of paying the taxes for the subsidy, but it wasn’t meant to be comprehensive.
From my earlier post, I think it very likely that the direct benefits are much less than most people consider. And the costs of the subsidy are probably higher. This is probably why he included the former and not the latter in his list.
Nicolas (#1): that tax credit is borrowed money and Carol’s kids are the ones who will be stuck with paying off the massive government debt. So much for caring…
The other critical factor is the source of the electricity. Maybe Bob and Alice are planning to charge their Leaf from solar panels on their roofs, but if they’re taking fossil fuel generated power from the grid, the net environment benefit may be small or even non-existent.
Dan Hill:
Nicolas (#1): that tax credit is borrowed money and Carol’s kids are the ones who will be stuck with paying off the massive government debt. So much for caring…
No, this isn’t quite right — the $7500 goes to Carol’s kids, but it’s paid back mostly by *other* people’s kids. So if Carol cares about her own kids and not other people’s, she’ll be glad to take the tax credit. On the other hand, if she cares about her own kids and not other people’s, she also won’t much mind the pollution (99.99999% of which affects other people’s kids, not hers).
Of course, this could be seen as an example of using the free market to make people care “the right amount” about pollution.
The $7,500 is a payment from the public at large to the car-buyer as payment for the (purported) benefits to the public if the car-buyer purchases the electric car.
If we assume the $7,500 price is correct, then the car-buyer should consider only the $7,500 payment in the decision. This approach gives the correct weight to the (purported) benefits of purchasing the electric car. No consideration need be given to the public’s welfare because (if the price is correct) the public is indifferent about the car-buyer’s decision.
This reasoning is consistent with Steve’s point that a consistent position would take into account both the benefits and the costs to the public. Since the costs and benefits are (assumed) equal, the car-buyer need not consider the public’s welfare.
While I think Nathan makes a very good point about the possibility of the tax credit appealing to some, while the public health improvements appeal to others, I suspect a lot of people are motivated by both. I think Landsburg’s original point stands.
To that point, I think the explanation is simple – we think of others’ welfare in a lot of contexts (especially with regard to health), but don’t think about other people in other ways (taxes being a prime example). Our concern for others is highly dependent upon the context.
Hardly anyone is like Alice or Bob. A much more common view is Disinterested Dave, who has no desire to make an independent determination over whether the $7500 causes $7500 in public good somehow. Others have already made that determination.
I recently got a similar tax break myself, and I certainly did not worry about whether my neighbors had decided to spend their money wisely. I do not even know how I would make that judgment, and I am not sure why I would care even if I could.
But if you care about your neighbors’ children — and if you’re morally consistent — you’ll care not just about their health, but about their inheritances,…
Why would it be morally inconsistent to care more about your neighbors’ children’s health than about how much money they’ll potentially inherit?
Sorry, allow me to rephrase. Would it be morally inconsistent to care more about your neighbors’ children’s health than about how much money they’ll potentially inherit, and if so, why?
Wait, so it’s a bad thing to take the tax credit even though the people not driving the Nissan Leaf/Juke are contributing more pollution? Aren’t you supposed to pay more if you cause more damage in an economically efficient system?
The comparison website specifically says that effects on public health are not counted in the cost comparison, so I think the cost comparison section is for your friend Alice while Bob has to do some extra math to see if the electric car is for him. If he believes that buying an electric vehicle will save taxpayer funded health care at least $7,500, then his tax credit isn’t coming out of anyone else’s pocket.
I agree with Alice from the perspective of how far out to push the analysis. I had a case study in college where there was a clear answer to a cost/benefit analysis because there were so many minutia involved. I drew the line about 3/4 of the way down simply because I was losing track of all of the benefits. (It was an interesting project which failed because the prototype could not be scaled up.)
The problem is not with the question, as presented, but with the public policy question…essentially the same as: should I or should I not vote? I may not like the outcome of the vote but what is the cost of voting vs. the probability of changing the outcome of the election?
@ Harold #5:
Thank you for the point that the use of the leaf still emits pollution.
If someone is concerned with emitting pollution, they should move to within walking distance of work, for most people this gives them a 4 mile (assuming 1 hour commute) radius from work.
An interesting statistic would be the average commute distance of those who drive the Leaf to determine how much pollution they emit.
Rather than a pitch to Alice or Bob or Carol or Dave, maybe it’s a pitch to Grover – who places an affirmative value on draining resources from the US Treasury.
Is Landsburg suggesting that the plight of living with global climate change is somehow lessened if there are lots of other people sharing the experience with you? I think the climate is a public good – and the extent to which I experience its benefits or burdens is not heavily influenced by the extent to which my neighbor experiences benefit or burden. This is fundamentally unlike the $7500 tax break – the burden of which can be divided among a population.
To be sure, wholesale costs almost always differ from retail costs — including the cost of wholesale and retail energy. This is hardly unique to electricity. Indeed, I’m told that the carbon costs related to manufacturing and transporting solar cells (typically from China) can swamp their benefits. But allegedly these costs has been falling over time.
What does “renewable capacity is close to 100%” mean? True, most generators powered from renewable sources have low operating costs (especially low fuel costs) and thus utilities are prone to turn down other generators when they can get substitute power from renewable sources. But that’s not the whole story – because utilities can’t always get that substitute power.
Yes, many sources of renewable energy are “intermittent.” But that’s not what I’m talking about.
Wind turbines generate the most power where it’s windiest (e.g., off-shore, or in the rural Great Plains) and when it’s windiest (e.g., sunrise, sunset). But that’s not where and when power is most needed. Thus wind power is often “curtailed” (not permitted onto the transmission grid). This is because 1) the existing transmission lines are already full of power from other sources and 2) it’s too expensive to build more transmission lines off-shore, or out to Bumfuck, ND, just to have enough capacity to harvest power at sunrise and sunset, when there’s scarcely any demand for power anyway.
However, if you had your OWN wind supply (lived on the Great Plains), had your OWN turbine, and plugged in your OWN battery – say, in your electric car – overnight, then you could use power that would otherwise never have gotten onto the transmission grid. So if your goal is to emphasize the environmental benefits of an electric car, these plausible assumptions would do the trick.
But even without all these assumptions, I expect that the energy you receive charging your car overnight will tend to have a larger percentage of wind power than would energy you receive in the middle of the day.
In sum: The fact that coal and gas generate most kWh doesn’t mean that they generate the most kWh during the specific hours that you would charge your car. And choosing to use electricity during periods of low demand rather than high demand is not just some silly game of number-shuffling; it really effects which fuels get used. If demand for electricity at sunrise and sunset grows (e.g., because more people are plugging in their cars overnight), eventually it will become cost-effective to build that transmission line to Bumfuck, ND, to harvest more wind power.
My understanding of Steve’s position is as follows. Having a highly developed social conscience, Bob cares about his neighbors health. To be morally consistent, he also cares about his neighbors’ finances and is “reluctant to lift $7500 from his neighbors’ pockets.” Therefore, the tax credit doesn’t belong in the pro-Leaf column because it equates to something Bob is reluctant to do.
A different position is as follows. Having a highly developed social conscience, Bob cares about his neighbors health. To be morally consistent, he also cares about his neighbors’ finances and is “reluctant to lift $7500 from his neighbors’ pockets.” However, Bob believes he and his neighbors will be better off if more people choose Leafs. Bob’s circumstances, which he imagines is similar to many of his neighbors, preclude him from buying a Leaf without the tax credit. Therefore, from Bob’s perspective, the tax credit belongs in the pro-Leaf column because he views it as an essential, worthwhile investment of collective funds and rejects the notion that he is lifting money from his neighbors’ pockets.
This looks like a classic case of double-counting, not uncommon when BCA is used for advocacy. Suppose the present value of the public health benefits of the Leaf are $7500, the same as the tax credit (I’m not saying they are, just suppose.) Then when making a benefit cost comparison, you can either add $7500 to the benefits of buying the Leaf or subtract $7500 from the cost, but not both like CleanTechnica wants to do.
Landsburg is right that you definitely can not count both of the benefits in full, but it’s not entirely correct to say that you shouldn’t count some of the benefits of the health increases in addition to the subsidy. If the leaf is associated with positive externalities then some of the benefit is also going to Bob’s neighbors. It may be that overall their net costs are higher, but the sum of the benefits to Bob and to society should be net positive. Again, we’re assuming net positive externalities on the part of the Nissan Leaf.
The only question we should be asking ourselves is whether the subsidy is an effective way to bring us to the equilibrium demand given positive externalities associated with the Nissan Leaf, or if another way would be more effective. My preferred way is to estimate the costs of climate change and impose that level of cost on climate change (carbon taxes, gas taxes, etc) producing activities rather then making decisions about what to subsidize. That way the market can decide how to react to the cost, rather then forcing the government to decide between microchips and potato chips. However, I acknowledge that consumer sentiment is such that, subsidies sound better then taxes. I won’t blame politicians on the right, I’ll be generous and say that their illogical focus on the “evils” of taxes in disproportionate measure to the evils of “subsidies” (talk about schizophrenic) is a response to constituent demand rather than because they don’t recognize that taxes are in some cases preferable to subsidies.
In conclusion, I think a more honest cost/benefit analysis would have mentioned in the CONS section that taxes must increase for your neighbors, not that they shouldn’t have mentioned both the health benefits and the subsidy. Is that fair?
If you assume the guy cares about both lungs and pocketbooks, but cares about everyone equally, then that’s 7500 loss to other people in money, 7500 gain to himself in money, and gains to other people’s lungs. The loss in money balances out the gain in money (since the money is just being transferred from one party to another and he cares about the parties equally), and adding the lung gain makes it positive. So it’s a net positive.
Steve’s criticism is valid insofar as CleanTechnica counts the 7500 gain but not the 7500 loss–but even if CT were to count correctly, it would still be a net positive, unless the guy cares *only* about other people than himself.
@Nobody/19
if she cares about her own kids and not other people’s, she also won’t much mind the pollution (99.99999% of which affects other people’s kids, not hers).
Is Landsburg suggesting that the plight of living with global climate change is somehow lessened if there are lots of other people sharing the experience with you?
Nope he’s saying (I think) that the damage done to her kids by the 1 extra car is small. More precisely the total damage of climate change = Sum_{people} Sum{Polutants} Pollutant *Person. Which is very big. However Sum_{people} Pollutant*Person (the damage to everyone by a particular pollutant in this case a car) is “medium sized” in the sense it’s not billions or billionths (someone in goverment reckons it’s $7500).
Presumably Sum{Polutants} Pollutant *Person (the damage a particular person does by polluting) is also meso-scaled. The damage a single pollutant does to a single person is small.
@Nobody/19: Also how do I make text appear as a quote rather than as just regular text?
Whereas the damage does by a married pollutant to a married person is large?
nobody.19: I like the Grover suggestion.
I suppose if the pollutant and the person are married. Thanks for the quote help.
@Frosty:
You either care about your neighbors’ children, or you don’t. If you care about their well-being, there’s no reason to care about their air for breathing (which, if clean, will presumably keep them healthy) but not their inheritances (which can be used to pay for their healthcare, which ALSO makes them healthier).
“Whereas the damage does by a married pollutant to a married person is large?”
I object to your suggestion that pollutants can get married. I define marriage between two human beings and no amount of logical argument to why pollutants should have every right to the same things as humans will convince me otherwise. Also do you really want pollutants being able to adopt children, think of the harm it could do to children?
Why has nobody pointed out the monster hole in the original argument?
Bob is very concerned about the environment. He estimates that an
electric car avoids $9000 worth of externalities from pollution. He
happily accepts the $7500 as partial reimbursement for his decision
and is willing to shoulder the $1500 unreimbursed amount due to his
level of environmental concern.
No incoherency involved. It’s just a question of the amount of his
charitable contribution to the public good.
Ron #31,
I’m glad you feel that way. I’m no longer going to sing karaoke, which I estimate benefits the public a few hundred thousand. SO, I am going to steal $100,000 from the federal treasury. I’ve still made a large charitable contribution to the public good.
Nobody has pointed out the hole you claim as it does not exist.
David #32
Your example involves you stealing money, whereas Bob doesn’t steal money from anyone. Significant difference.
Robi #30 Bob does care about his neighbors’ children’s health and financial well being. Bob is morally consistent because he believes his neighbors’ children will be healthier and also better off financially. It is remarkably over-simplified to conclude that whenever money is collectively invested, the investors’ children’s inheritance must be less.
David Wallin @ 33
You’re a thieving swine. However, if you’ve been honest about your
estimate of public benefit, then you’re a consistent thieving swine.
(I’m, of course, dubious about your estimate, as I suspect the high
bid so far for you to desist is probably $0.)
#19 “To be sure, wholesale costs almost always differ from retail costs —”
The MPGe is the right metric for the consumer to judge how much he will pay for the fuel in his car. It is the wrong metric to use to work out how much pollution is caused.
“What does “renewable capacity is close to 100%” mean?”
The DOE responded to a question about why it used only fossil fuel efficiency instead of including renewables and nuclear. If nuclear and renewables were included, the factor should be between 0.4 and 0.53 instead of 0.328 depending on how nuclear was treated. They responded (p36989)
“First, existing nuclear and
hydroelectric plants are now operated at
essentially full capacity. Since no
significant additions to U.S. nuclear or
hydro-electric capacity are planned, any
increase in electricity demand that
results from expanded production and
use of electric vehicles is very likely to
be met by fossil fuel-fired powerplants.”
They then go on about nuclear being less efficient than coal because the temperatures are lower. From a gas emission perspective this is irrelevant. Similarly it is irksome when people quote a wind turbine efficiency at 30% or whatever. If the fuel is free and non polluting, the thermodynamic efficiency does not matter.
Anyway, I took this at face value. It may be more complicated than that, particularly by shifting demand to night time as you say. However, it is probably true that most of the electricity is still generated by fossil fuels, and even if you include some renewable content, the overall picture will not change that much at the moment.
If electric cars become very common, they could be beneficial for the grid as they will typically be left charging for longer than they need -e.g. overnight or all day. A smart meter could match demand to supply and help smooth out the demand. A “quick charge” option could be available.
Wait a minute. How come you are excluding spillover effects from the list of incentives, as opposed to adding them as another dimension. Alice and Bob may choose to operate with binary weights on those dimesions, but there is nothing incoherent about putting real weights on them. What about a typical entrepreneur Ed who cares about making that $7500 for himself but is also passionate about supplying that great clean air to the public?
Ken@24 and Daniel@22, you’re missing the fact that the electric car costs more before the tax credit.
For the economy as a whole there is one benefit (cleaner air) and one cost (the electric car costs more) which would be compared to see if it’s worth it.
The individual purchaser, who may well put different weights on the cost/benefit for other people vs for herself, should consider both the increased cost of the car vs the $7500 tax credit (which according to that website is positive), as well as the benefit to other people (cleaner air) vs the cost (the $7500 in taxes). We don’t have enough information to say whether the latter is positive or negative on net. If it is also positive, then it’s clear that the electric car is better. If it’s negative, however, whether or not you decide to buy the electric car will depend on how you weight yourself vs other people.
Of course, the original article does give enough information to do the proper calculation — it just conveniently neglects to remind the reader to take into account the $7500 in taxes that other people have to pay as a cost to other people, even though it mentions the benefits to them.
Err, shouldn’t have said information in #40. It mentions the benefits, but doesn’t provide any data to estimate how much those benefits might be worth.
@nivedita,
Actually he does give us a reason to assume that the Nissan leaf is on net cheaper than the jive directly. Mainly that by by year 13 you have gained over $10,000 in present value due to cheaper fuel consumption (assuming a 4% opportunity cost) which offsets the initial more expensive value of the car. Granted we don’t know about other maintenance costs associated with the electric versus the gas burning car, anyone???
@nivedita,
That said, I think the author of the article does a slight of hand when he doesn’t use the proper comparison (some sort of hybrid vehicle). A better comparison would have been against a Toyota Prius. I think with that comparison you’d definitely have an argument against the author of the clean technica page. However we’re also not considering the value of the added investment into producing more efficient, less costly batteries, but I’ll leave that aside.
My friend Carol cares about looking like she cares about the environment. She also cares about money. The Leaf is for her. I believe she is responding rationally to the incentives presented her.
Ken B, I believe you are are right. My friend Cato cares passionately about the air quality in the city in which he lives, and he cares about money. The leaf is for him too.
When did this become a discussion about legalizing marijuana?
Suppose I’m reading the Nissan ad as part of a car-buying decision between the leaf and another car.
I see the bit about it being ecologically friendly and I think “wow,that’s great – I’d pay $1000 extra for that feature over the same car without it”.
I then read “and save $7500 on list price”.
As the car happens to be $8000 (unsubsidized) more than the non-eco car I also like I will buy it because the two features combined make it worth more to me.
If Nissan had read Steve’s post and had dropped the eco-bit I would buy the other car because I would think it was worth more to me as I would not know about the Eco-friendly bit.
(If I happened to see taking tax payers money as a negative then this would count against the leaf – but as sales subsidies do seem to increase demand I assume this is a minor effect)
In other words you don’t need to be a “moral schizophrenic” to value the positives of not harming your neighbors lungs over the negatives of taking tax payers money – it would be the exception rather than the rule that an individual would value these 2 things identically.
“Ken@24 and Daniel@22, you’re missing the fact that the electric car costs more before the tax credit.”
Congratulations, you’ve managed to convince someone on the Internet of something.
You’re correct. If the $7500 in tax credit is given to subsidize the extra cost of the car, then we are indeed trading off $7500 of your neighbors’ pocketbooks for their lungs.
It does get a little tricky to figure out exactly who the money comes from, however. Assuming you have a chain of deals from buying the car to working more to produce the car. If you mark off the gain and the loss at each transaction, the worker works harder but the buyer doesn’t get a car that lasts any longer, and the extra salary earned by the worker doesn’t count because you marked it off against the loss to the guy paying his salary. If you mark off the money gained by the money lost for each *person*, then the extra salary earned by the worker is marked off against the extra work done by him but the extra money paid by the taxpayers for the car isn’t marked off against anything.
Either way his neighbors lose $7500 (in work or in cash) for his neighbors to get cleaner air.