Assume that we do in fact desire to recycle everything. I don’t think so, in fact I know not so but that’s another matter for the moment. Sure, we want to save resources but sometimes recycling uses more resources than not-recycling. So, therefore, in order to save resources we shouldn’t recycle.
But as I say, let’s leave that aside. Let us now think of how we should recycle if we’re going to. There are two basic structures we can use. Shovel everything into a factory and let that machine sort it all out. This has downsides, of course it does. Certain waste streams will contaminate others for example. We certainly don’t want to mix sewage and surplus food if we’re to be sending the surplus food to hungry people. On the other hand if we’re going to send all organic waste to digesters of organic waste then we can do that just fine.
So, the system we use does depend – that usual economic answer to any question, it depends.
The other system is the idea that everything is sorted at the point of it becoming waste. We end up, in each household, with a food bin, a tins bin, a plastics bin, paper, cardboard and on and on. The separation is done by hand.
Sure, this has upsides, no mixing of streams, it also has downsides, it takes time. It generally being true – generally and not always – that hand doing something is less efficient, uses more resources, that sticking it all through a girt big factory.
We thus need a method of testing the propositions. Which system uses more resources. Recall, we’ve already agreed that we’re going to be recycling. Now we want to know what is the least resource intensive manner of doing so. And we know how to do that, use the price system. Or, if we’ve a system in which things are currently unpriced we can do a cost benefit analysis. Where we fiddle about to price those things currently unpriced so that we can make a decision.
Cool – so, one of the things we’ve got to put into our calculation is the time it takes people to do that home sorting. All the labour costs of the factory model are already in the factory model, they’re explicit. The home sort costs are implicit and not fully costed. We need to add them in.
Hmm, but, you know, 5 minutes here and ten there, perhaps 30 minutes per household per week, we don’t need to charge – charge in the sense of include in our model costs – do we? Well, that depends. We could say that humans don’t value their own time in that manner and not include it. we could say that people would be glad to worship Gaia in such a manner. Or, if there is some value to that time what is it?
Interesting new research showing that actually people do value their time. Even in little 5 and 10 minute chunks. Because we can go look at what people will pay in order to save 5 and 10 minutes here and there in waiting for a lift. Sorry, a Lyft. What is that number?
The value of time determines relative prices of goods and services, investments, productivity, economic growth, and measurements of income inequality. Economists in the 1960s began to focus on the value of non-work time, pioneering a deep literature exploring the optimal allocation and value of time. By leveraging key features of these classic time allocation theories, we use a novel approach to estimate the value of time (VOT) via two large-scale natural field experiments with the ridesharing company Lyft. We use random variation in both wait times and prices to estimate a consumer’s VOT with a data set of more than 14 million observations across consumers in U.S. cities. We find that the VOT is roughly $19 per hour (or 75% (100%) of the after-tax mean (median) wage rate) and varies predictably with choice circumstances correlated with the opportunity cost of wait time. Our VOT estimate is larger than what is currently used by the U.S. Government, suggesting that society is under-valuing time improvements and subsequently under-investing public resources in time-saving infrastructure projects and technologies.
Hunh. People value their time at about the average wage. Seems reasonable, the decision as to whether to have leisure or not is compared against the price of not-leisure. We go fishing when that’s more valuable to us than the money we can earn by working. Standard substitution effect stuff – and logically the decision as to the value of leisure is going to be about what can be earned by non-leisure.
This really is the underlying assumption made about the Laffer Curve, the supply of labour working hours and all sorts of other stuff. All of which make sense themselves, so we know that it is indeed one of those things that’s true about human beings.
The implication of this for recycling is that we now have to price that 30 minutes per household per week at about this average wage. That $19 an hour translates into some £12 or £13 for the UK (mean, full time and part time wages). Call it £12, that’s £6 per week per household.
25 million households, 52 weeks a year, our home sorting system has a cost in it of £8 billion a year. A cost which our current calculations of the system cost do not include.
My contention would be that the inclusion would entirely tip the decision to using the centralised, one waste stream, factory model. You know, if only we counted resources used properly.
But then my conclusion would be that if we added £8 billion into the costs of the recycling system then we’d conclude we should just chuck it all in a hole in the ground anyway. Something which has the advantage of being true even if unfashionable.