EU lightbulb ban violates simple economic principles

The European Union’s new ban on incandescent lightbulbs violates simple economic principles and imposes substantial hidden costs on the economy.

By Martin Hutchinson, Breakingviews.comPublished: 12:17PM BST 02 Sep 2009
Fluorescent bulbs don’t work as claimed and have considerable disposal problems. If the new bulbs were better, consumers would choose them naturally, and could be nudged to do so by a carbon tax.
The EU ban is an attempt to forward a policy goal – combating global warming – by statutory means. As such, it resembles the Corporate Average Fuel Economy restrictions, imposed on the US automobile industry by Congress in 1975.
Such legislation imposes substantial costs on both consumers and the economy, but hides them so that legislators avoid blame. It often has perverse consequences; in the case of CAFE standards consumers switched to sport-utility vehicles, less fuel-efficient than comparable saloons but outside the scope of the initial law. The long-term cost of those standards arguably included a significant contribution to the bankruptcies of General Motors and Chrysler.
Such policy goals can better be met by explicit taxes, which are not fully dead-weights on the economy, but fund government and substitute for other taxes. They also impose clear costs on oil consumption or carbon emission, allowing consumers to make their own purchase decisions with those costs taken into account.
The upfront cost of compact fluorescent lightbulbs, while higher than that of incandescent bulbs, is now low enough that if the claimed energy savings were real and inconveniences modest, rational consumers would switch.
However, CFLBs emit considerably less light than is claimed, and a substantial percentage burn out before their expected lifespan, somewhat offsetting the net cost saving from installing them. Moreover, consumers are heavily inconvenienced in their disposal, since they contain toxic mercury, which is illegal to discard in ordinary trash.
Had governments enforced truthfulness in the efficiency and lifespan claims of CFLBs, and provided convenient disposal mechanisms, many consumers would have switched voluntarily. Then the additional energy usage by the holdouts would have been modest and declining. Forcing consumers to switch imposes arbitrary costs, especially on those who for health or other reasons want to remain with incandescent bulbs. It also violates market principles of consumer freedom of choice.