Do price signals work? Apparently …

I stumbled upon this piece and voted in this online poll. I said I wasn’t making any changes to my behaviour as a result of the carbon tax. But most people are! So far so good!

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Fred Argy
Fred Argy
9 years ago

That is encouraging, Nicholas. One of the mistaken ideas is that people do not react to price signals and as most people are being compensated there will be no environmental effcts. This suggests otherwise.

Pedro
Pedro
9 years ago

It would surprise me if people didn’t react to price signals. It would also surprise me if smart economists automatically thought the reactions were necessarily a change for the better.

I reacted by buying solar panels. Origin will give me money for the surplus power and the initial price is being subsidised by other electricity customers. Do you think that is a good thing?

murph the surf.
murph the surf.
9 years ago

the politics we have seen about this issue are really a disgrace for us all.
hummm….leadership seems such a dated and now disregarded concept but I also encounter people telling me that education isn’t the answer to every question!
Agree with you Pedro about the solar panels.I thought the solar schemes are really an example of poor planning and/or implementation.
Then again my neighbour thinks his bill is such that a suitable number of panels will cost a sum that will be recovered very promptly.
Was the combination of features of cheaper production and rising prices for electricity not the outcome the scheme wanted? I appreciate that a major component of the electricity price rises is distribution investment related.Such schemes of control need to go too!

Pedro
Pedro
9 years ago

So Nicholas, are we agreed that responses to price signals are not necessarily a good thing if the response is itself a decrease in efficiency? No need for us to rehash whether my solar panels (or even everyone’s) appear likely to save the barrier reef. I see from the govt’s table that the $9 for the carbon tax is dwarfed by the renewables contribution to the electricity price. So this price signal has encouraged me to contribute to increased prices for people who can’t afford the panels.

john r walker
john r walker(@annesanders)
9 years ago
Reply to  Pedro

Pedro I thought most of the increase (in NSW at least) was down to ‘gold plating’. We have greatly reduced our consumption and each time we have the fixed supply cost has risen

john r walker
john r walker(@annesanders)
9 years ago
Reply to  john r walker

BTW
I do not know if it is true, but a engineer living out of town claims that disconnecting from the grid and running your own diesel generator would be cheaper .

Steve at the Pub
9 years ago

Yep I’ve changed my behaviour since the carbon tax.
I spend all my time prowling through price lists from suppliers, so I know how much to raise my own prices, or which services to drop entirely.

Some of the bigger suppliers, despite burning the midnight oil, have not yet provided a new price list. Hmm…..

Phil Picone
Phil Picone
9 years ago

Of course people react to price signals. In South Australia water consumption dropped by 60Glitres last year as people cut their wastage, installed tanks and became more efficient. The privately owned water company wasn’t happy!

Tel
Tel
9 years ago
Reply to  Phil Picone

In other states the publicly owned water companies had the good sense to ensure that any other options are outlawed… so they always stay happy :-)