Incentives Work
But the New York Times is clueless

2 Feb 2008 in Regulatory Economics

In today's New York Times, Elisabeth Rosenthal says that Irish consumers don't use plastic shopping bags anymore. She acknowledges that the government has imposed a new tax of 33 cents per bag, but she appears to be baffled that consumers respond to taxes. Instead, she searches for mystical explanations.

Writes Rosenthal:

In 2002, Ireland passed a tax on plastic bags; customers who want them must now pay 33 cents per bag at the register. There was an advertising awareness campaign. And then something happened that was bigger than the sum of these parts.

Within weeks, plastic bag use dropped 94 percent.

Rosenthal is clearly amazed by this change in behavior but cannot accept its obvious economic logic. Instead, she asserts that a powerful changes in cultural norms has occurred:

Within a year, nearly everyone had bought reusable cloth bags, keeping them in offices and in the backs of cars. Plastic bags were not outlawed, but carrying them became socially unacceptable — on a par with wearing a fur coat or not cleaning up after one’s dog.

Rosenthal does not report any evidence that sales of fur coats is down 94%, or that the urban problem of uncollected dog waste has virtually vanished. Indeed, if a genuine change in cultural norms had in fact occurred, there would be no need to impose the tax.

In lieu of even the most rudimentary economic analysis, Rosenthal relies on anecdotes that display additional economic ignorance:

Today, Ireland’s retailers are great promoters of taxing the bags. “I spent many months arguing against this tax with the minister; I thought customers wouldn’t accept it,” said Senator Feargal Quinn, founder of the Superquinn chain.

This is false, of course. Consumers did not accept the tax. They changed their behavior to avoid it.

Economics aside, it is clear that a cultural change is underway. Plastic shopping bags, today's environmental bêtte noire, were the solution to an environmental bêtte noire of the 1980s -- the paper grocery bag.

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