Some rituals of modern domestic living vary little throughout the developed world. One such is the municipal refuse collection, usually once a week, your rubbish bags or the contents of your bin disappear into the bowels of a special lorry and are carted away to the local tip. To economists, this ceremony is peculiar, because in most places it is free. Yes, households pay for the service out of local taxes.{{U}} (71) {{/U}}Yet the marginal cost of rubbish disposal is not zero at all. The more people throw away, the more rubbish collectors and trucks are needed, and the more the local council has to pay in landfill and tipping fees.
{{U}} (72) {{/U}}But as Don Fullerton and Thomas Kinnaman, two American economists, have found, this seemingly easy application of economic sense to an everyday problem has surprisingly intricate and sometimes disappointing results. In the past few years several American towns and cities have started charging households for generating rubbish. The commonest system is to sell stickers or tags which householders attach to rubbish bags or cans. Only bags with these labels are picked up in the weekly collection.
In the paper published last year Fullerton and Kinnaman studied the effects of one such scheme, introduced in July 1992 in Charlottesville, Virginia, a town of about 40,000 people. Residents were charged 80 cents for each sticker. This may sound like the sensible use of market forces. In fact, the authors conclude, the scheme's benefits did not cover the cost of printing stickers, the sticker sellers' commissions, and the wages of the people running the scheme.{{U}} (73) {{/U}}
This is inefficient: compacting is done better by machines at landfill sites than by individuals, however enthusiastically. The weight of rubbish collected in Charlottesville fell by a modest 14%.
{{U}} (74) {{/U}}The one bright spot in all this seems to have been a 15% increase in the weight of materials recycled, suggesting that people chose to recycle free rather than pay to have their refuse carted away. But the fee may have little to do with the growth in recycling, as many citizens were already participating in Charlottesville's voluntary recycling scheme.
{{U}} (75) {{/U}}To discourage dumping, for instance, local councils might have to spend more on catching litterers, or raise fines for littering, or cut the price of legitimate rubbish collection.
A. True, the number of bags or cans collected did fall sharply, by 37% between May and September 1992. But rather than buy more tags, people simply crammed more garbage--about 40% more into each container.
B. This looks like the most basic of economic misunderstandings: if rubbish disposal is free, people will produce too much rubbish. The obvious economic solution is to make households pay the marginal cost of disposing of their waste. That will give them an incentive to throw out less and recycle more.
C. City authorities are now considering a project to teach Government waste collectors the skills, such as what rubbish to collect and how to classify it. If approved, the project will help ease the financial burden of the city's waste treatment.
D. It would be foolish to generalize from this one case, but the moral is clear, economic incentives sometimes produce unforeseen responses.
E. Less pleasing still, some people resorted to illegal dumping rather than pay to have their rubbish removed. This is hard to measure directly. But the authors, ob-serving that a few households in the sample stopped putting rubbish out, guess that illegal dumping may account for 30%-40% of the reduction in collected rubbish.
F. But at the margin the price is zero: the family that fills four bins with rubbish each week pays no more than the elderly couple that fills one.