Understanding the hidden costs

31 May, 2006

Often when buying something that’s going to use energy, be it white goods or a house, you can be confronted with the choice about energy efficiency. Which is going to be less expensive, buying the low energy efficiency one and paying for the electricity or buying the more expensive efficient one and saving on electricity.

Now for white goods they all have a nice label with a number of stars on it telling you how energy efficient it is. My problem with this is, how do the stars relate to the actual dollar amount I am likely to pay over a year? Sure they quote how many KwH I am likely to use, but surely we can actually do a dollar calculation here. I know that electricity cost is around 10-12c/kWh because I just looked it up, but how many people do this before buying a fridge? If a device is going to use 500kWh/year, surely they can have either a table with price at 10c/kWh = $50/year, 12c/kWh = $60/year etc, so we can actually do the estimate.

Of course unless we actually have an externality charge on CO2, it may not actually make us save energy, but at least it would give us a better chance to work out that if I expect to keep my fridge for 3 years I will save around $100 by buying the more energy efficient one.


My problem with the nuclear power debate

30 May, 2006

Cross posted at Larvatus Prodeo

I have a problem with the nuclear power debate in Australia, and it isn’t a problem with nuclear power. I’m pretty much in agreement with Tim Flannery that the threats posed by global warming are so much greater than the risks involved with nuclear power and that the option of using it should be very much on the table.

Instead my problem with the debate is that it seems to be about whether we should use nuclear power, not whether we should consider nuclear power as an option. This is missing an important point. As even the uranium industry admit

Coal is, and will probably remain, economically attractive in countries such as China, the USA and Australia with abundant and accessible domestic coal resources as long as carbon emissions are cost-free.

As it stands nuclear power isn’t really an economic option in Australia. It’s just not a cost effective way of producing power compared with the other options.
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The Undercover Economist

29 May, 2006

I recently finished reading the book The Undercover Economist, and went along and saw Tim Harford, the author, talk at the Sydney Writers Festival. Both the talk and book were excellent, although the talk covered (unsurprisingly) much of the material that he covers in the book.

It would be wrong to compare the book to Freakanomics, which while entertaining, was for a large part just a collection of curiosities and from my point of view much more statistics than economics. Rather, The Undercover Economist explains actual microeconomics and in a way that is both enthusiastic and interesting. As a lay person, even if one who has recently been interested in economics, I found the explanations of some basic ideas made things much, much clearer. The passion that Tim Harford clearly has for his subject is also evident both in the book and how he talks in person.
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Limits on rationality

25 May, 2006

Over at Catallaxy, Jason makes some interesting comments on an article by Roger Scruton about the legacy of J. S. Mill and Utilitarianism which Scruton describes as:

… a moral disorder that would have died out two centuries ago, had people not discovered that the utilitarian can excuse every crime.

Scruton points out that Mill realised the problems that the tyranny of the majority etc, could have on individuals, so combined Utilitarianism with the principle of individual liberty.

According to Mill’s argument, that way of thinking has everything upside down. The law does not exist to uphold majority morality against the individual, but to protect the individual against tyranny–including the “tyranny of the majority.”

or as Mill put it himself:

That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in the opinions of others, to do so would be wise, or even right… In the part which merely concerns himself, his independence is, of right, absolute. Over himself, over his own body and mind, the individual is sovereign.

Scruton seems to see this as a recognition of the problems of Utilitarianism, but from my line of thinking its is merely a realization of the limitations of what can rationally be calculated, by any individual or group of individuals, not an issue with the normative goal of utilitariansism.
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The Defenestration of Prague

23 May, 2006

Today, the 23rd of May, is the 388th anniversary of the second defenestration of Prague, one of my favourite historical events. The day that Calvinist Bohemians revolted, seized the ministers of the Catholic Holy Roman Emperor and flung them out a 15 metre high window in Prague Castle. The event triggered the terrible Thirty Years War, left parts of Germany devastated and depopulated for several generations and ultimately culminated in the Peace of Westphalia the first international agreement to acknowledge countries sovereignty over their internal affairs.

C. V. Wedgewood in her classic The Thirty Years War described the incident like this:

A hundred hands dragged them towards the high window, flung back the casement and hoisted them upwards. Martinitz went first. “Jesu Maria! Help!” he screamed and crashed over the sill. Slavata fought longer, calling on the Blessed Virgin and clawing at the window frame under a rain of blows until someone knocked him senseless and the bleeding hands relaxed. Their shivering secretary clung to Schlick for protection; out of sheer intoxication the crowd hoisted him up and sent him to join his masters.
One of the rebels lent over the ledge leering; “We will see if your Mary can help you!” A second later between exasperation and amazement, “By God, his Mary has helped,” he exclaimed, for Martinitz was already stirring. Suddenly a ladder protruded from a neighbouring window; Martinitz and the secretary made off under a hail of misdirected missiles. Some of Slavata’s servants, braving the mob, went down to his help and carried him after the others, unconscious but alive.

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Tacoma Narrows Bridge

19 May, 2006

I imagine that the story of the Tacoma Narrows bridge will be familiar to most people. For those that aren’t, the bridge was a suspension bridge in Washington State built in the late 30’s. On the 7th of November, 1940, it began to be shaken by strong gusting winds. Most disturbingly it began to resonate with the winds, in several modes including tortionally, and increasingly violently.

The situation was described by Leonard Coatsworth who drove onto the bridge.

Just as I drove past the towers, the bridge began to sway violently from side to side. Before I realized it, the tilt became so violent that I lost control of the car… I jammed on the brakes and got out, only to be thrown onto my face against the curb… Around me I could hear concrete cracking… The car itself began to slide from side to side of the roadway.
On hands and knees most of the time, I crawled 500 yards [457 m] or more to the towers… My breath was coming in gasps; my knees were raw and bleeding, my hands bruised and swollen from gripping the concrete curb… Toward the last, I risked rising to my feet and running a few yards at a time… Safely back at the toll plaza, I saw the bridge in its final collapse and saw my car plunge into the Narrows.

The story is a cautionary tale for engineers, and a classic example of the power of resonance on a structure. Fortunately, other than Tubby the Dog stranded in one of the cars, no lives were lost. If you want to know more read the wikipedia entry.

The pictures and video of the event are always worth a look – the reason for the post! I really can’t see this enough times.
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Contradictory Nobels

15 May, 2006

The Sydney Morning Herald reports of an article published by federal Treasury, on the “Nobel Prize in Economics”. I put the scare quotes in so as to note that its not a real Nobel Prize, but rather the The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel.

Anyway moving on from the snobbishness, the SMH article reports that despite some fairly large contradictions between different areas of economics, the awards seem to have been distributed around fairly, noting:

As the joke goes, economics is the only field in which two people can share a Nobel Prize for saying opposing things. Gunnar Myrdal and Friedrich von Hayek come to mind.

On this score the economists shouldn’t feel to bad. Physics has the noted example of J.J. Thomson and his son George Paget Thomson who won Nobel Prizes in 1906 and 1937 respectively. The curious thing about this pair of Nobel winners being that the father J.J. Thomson won the Nobel Prize for showing that the electron was a particle, whereas the son, George Paget Thomson, won his Nobel Prize for showing that the electron was a wave.