> 0 Hey Baby, Is That a Prius You’re Driving? (Ep. 36) - Freakonomics Freakonomics


Hey Baby, Is That a Prius You’re Driving? (Ep. 36)

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For about $20 you can announce your environmental bona fides with a canvas tote that says “I’m not a plastic bag.” (Mario Tama/Getty Images)

Remember when keeping up with the Joneses meant buying a diamond-encrusted cigarette case? Such ostentatious displays of wealth during the Gilded Age prompted economist Thorstein Veblen to coin the term conspicuous consumption.

Conspicuous consumption has hardly gone away — what do you think bling is? — but now it’s got a right-minded cousin: conspicuous conservation. Whereas conspicuous consumption is meant to signal how much green you’ve got, conspicuous conservation signals how green you are. Like carrying that “I’m not a plastic bag” bag, or installing solar panels on the side of your house facing the street — even if that happens to be the shady side.

Conspicuous conservation is the theme of our latest podcast, called “Hey Baby, Is That a Prius You’re Driving?” (You can download/subscribe at iTunes, get the RSS feed, listen live via the embedded media player, or read the transcript here.) It centers around a paper by Alison and Steve Sexton, a pair of Ph.D. economics candidates (who happen to be twins, and who happen to have economist parents), called “Conspicuous Conservation: The Prius Effect and Willingness to Pay for Environmental Bona Fides.” Why single out the Toyota Prius?

S. SEXTON: The Honda Civic hybrid looks like a regular Honda Civic. The Ford Escape hybrid looks like a Ford Escape. And so, our hypothesis is that if the Prius looked like a Toyota Camry or a Toyota Corolla that it wouldn’t be as popular as it is. And so what we set out to do in this paper is to test that empirically.

The question they really wanted to answer was this: how much value do people who lean green place on being seen leaning green? The Sextons found that the Prius’s “green halo” was quite valuable — and, the greener the neighborhood, the more valuable the Prius is.

You’ll also hear from the British writer/economist Tim Harford (author, most recently, of Adapt), who nimbly tracks conspicuous conservation in his own country, including the little windmill that popped up on David Cameron’s London roof whilst he was campaigning to become prime minister.

HARFORD: Wind power can be pretty effective. But you need a really, really big windmill in a really windy location to be efficient. These little windmills, especially in an urban environment, where you don’t get a consistent flow of wind — they generate an incredibly small amount of energy.

Cameron did win the election, in part because he pledged to build an “eco-friendly economy.” But his windmill was as much about sending a green signal as powering his toaster or even demonstrating his commitment to environmental issues.

A big part of conspicuous conservation is of course what the signals mean, and to discuss signalling theory we have Robin Hanson of George Mason University. This is a man who has argued on his blog against admirable activities. To him, they’re part of a self-interested arms race, and should be seen as such:

HANSON: Managing our appearance is actually a lot of what we humans do. Trying to understand, business, trying to understand jobs, school, even medicine — if you don’t understand people are trying to manage their image, you miss out on a lot of what’s going on.

You’ll also hear about the cars that Hanson and the Sextons drive, and we ask whether Toyota thought much about conspicuous consumption before the Sextons. South Park certainly did.


Jim Chapdelaine

Ok, ok, I get it. All Prius drivers are sanctimonious, environmental zealots as born out in the Sextons study, right? Not so fast economists. I listened to the segment while driving in my 2007 Prius. I met a few of the demographics described but none of them
really described my primary motivation to get a Prius. Here’s 2 things to consider. Ok, 3 things.
My primary motivation was simple and was never mentioned - economics. When I bought my car it was the leader in mpg. I predicted that gas would go up (it did thank you) and it was time to ditch my Honda CRV. I have saved thousands of dollars. Maybe there are equally efficient economic choices now but I think the study was flawed. I am frugal and while my house has energy saving light bulbs and is sealed (inconspicuously) the Prius saved me money and probably is greener than other cars. That was not accounted for in the study. Just sayin’.
Another thing not mentioned is my theory of ‘first to the table’. Let’s talk about something I know about (I compose music for documentaries and play live dates for which I can fit my guitars, amps and a drum kit in my Prius). Your radio show is probably recorded and edited on a system called “Pro Tools”. I use it every day. Why?
Because they own the market. Despite initial flaws, they were the first to the table, established market dominance and weeded out a lot of equally good competition.
The same might be said of the Prius. They got there first. Fully featured, well branded, good battery and solid reputation without any sort of ‘experimental’ notions attached to the brand. They perform reliably and do what they say they do while the perception
of the others are that they got in the game late. None of this was considered by the Sextons who ably demonstrated the demographic aspect of the Prius brand but (not hating) I think, failed to cut to the quick of the particulars while using the Prius as an emblem of a particular phenomena. So, while interesting and partially accurate, they’re really addressing a broader set of circumstances. None of my neighbors have their com-posters in the front yard.
Part of being green is that it saves money. Light bulbs last longer and my pellet stove runs cheaper than oil. By sealing the cracks in my old house I save money.

Next time - follow the money. Very entertaining. You did forget our Obama stickers from Move On.

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Daniel J.B. Mitchell

In 2002, Toyota made a Prius that looked like an ordinary car. There is a photo at:
http://www.governmentauctions.org/uploaded_images/2k2prius-732165.JPG

Robert

Quite possibly the worst Freakonomics podcast I have heard. Generally I enjoy your podcasts and even show excerpts of your movie in my Economics class. This episode, however, I found to be quite awful on several accounts. The study you cited did not provide a genuine control group. It further subsumed all motivation for purchasing a Prius (or doing anything for the environment whatsoever) into motives of "conspicuous conservation" without examining at any length other motivations. Just as Freud's reductionist certainty of *why* people *really* do things (sex) ultimately fails because it dismisses the narratives produced by the individuals themselves, so your haughty reductionism in this podcast utterly failed to take into account any serious examination of the explicitly stated purchasing motivations of Prius owners, but merely glibly cited circumstantial evidence. Furthermore, your dismissive attitude about ecology in general reflects the classic Smithian and Marxian obsession with human labor and raw materials and fails to thoroughly examine the more complete "costs" of our conSUMPtion in general. Maybe re-read Hardin (Tragedy of the Commons) and Bourdieu (Logic of Practice). Then come back and tell me more about conspicuous conservation.

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Robert Richardson

So I will wear my little "green halo" when I fill-up my Prius for about $37 and the guy with the pick-up at the next pump clicked past $100. (I did not wait to see his total cost.)

cbb

The young economists that concluded that people buy a Prius because it is recognizable as a Prius have discovered something that most people learn by the time they are ten yrs old: people buy cars for transportation, but also for status (what the car says about them) and how the car makes them feel.

Why do people that never drive off-road buy a 4x4 Cadillac Escalade?

Why does anyone buy a German car when Japanese and Korean cars perform similarly, cost less and are more reliable? Why did the author of the study buy an Audi A4 instead of a measurably more reliable, cheaper, similarly performing Japan sedan?

Because he likes how he looks riding around in an Audi, and how it makes him feel sitting in the car.

But how are we to know that the Prius is not preferred because it is a better overall fit for the customers that buy it? It is not clear that this research controlled for the fact that for several years, the Prius was the only four door hatchback in the hybrid market, that Toyota was first to market with a four seat hybrid, that the Prius has one of highest overall customer satisfaction rating of any car, that the Prius is very highly rated in comparison of hybrids, and that the Prius has a strong safety and reliability record.

Also, did the authors consider and control for the fact that because the Prius is not available in a non-hybrid configuration, it is not easy to determine the upcharge for the hybrid upfit? In other words, if you set out to buy a Honda Civic hybrid (presumably the 'control' in this case), it is simple to directly determine the premium charged for the hybrid, and then determine that the benefits do not justify the hybrid premium. This is not simple with a Prius, because there is no non-hybrid option. This is a tactic that Toyota used when they developed their Lexus line of cars: consumers could be convinced to pay more for a 'no-options' luxury model than they could for a 'loaded' standard model.

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ed fernandez

I think a friend in the past was a conspicuous conservationist. She drove a Jaguar when she lived in Vegas. But when she moved to upper class and "environmentally conscious" Newport Beach, CA (really in another town but her house was just a few blocks away from Newport Beach where she did her shopping), she replaced her car with a Prius. The reason was not really because she cared about the environment but, as she admitted, "It's quite fashionable to drive a Prius here."

www.edfernandez.me

Joshua Correa (james kemper extra credit)

I believe wind power, solar power and going green is a good thing. However, after hearing this it is evident that some people do these actions just for show. Some want others just to see them going green or ect. Like they were talking bout since it is for good causes it might not be that bad of a method. An example i have is that I used work at United Supermarket. Although we still carry the plastic and paper bags we also sell canvas bags. I was able to see people who didn't care about what bag or hated plastic or just hated paper. I also witnessed customers who used canvas bags. Some of the customers seemed to just do it for show. They would shop and forget them in the car and when i carried the groceries out the canvas bags would just be sitting there in the back just for looks.

Linda Rogers

Where do these people think the power for their plug-in cars comes from? The electricity fairy? They aren't "going green" They just want the dummies out there to think they are.

Joseph Stakel

Greego

Green + Ego

Rich (probably white) people buying overly expensive Priuses are practicing stroking their greegos

They stroke their greego every time they park their proud world-saving device at Starbucks to show to the world, "Hah, I'm green! I bet you're green with ENVY instead of green with MONEY like me!"

Cara McKee

Hello, I've been playing catch-up on the podcasts of late and just listened to this today. Loved it. So thought provoking. You've inspired me to write this blog post: http://ohwedo.blogspot.co.uk/2014/03/conspicuously-green.html
Thanks for keeping my brain going while I'm doing LOTS of boring housework. :-)

Charlie

Disclaimer: I am a Prius owner.

The summary of this episode: In a world of ignorant retards, San Francisco or wherever, people will choose a Prius primarily based on it's design/label, and not on miles per gallons.

In a real world, people choose Prius because we can't afford the raising gas prices. Most Prius owners don't give a shit about environment. Businesses buy legions of Prius's for the exact same reason. Smart people only see the bottom line, the cost. Why do you think nobody drives a 7mpg Hummer anymore. They are practically non-existent. I have always concluded Freakanomics is just a comedy show and does not actually rely on logical common sense for its entertainment.

Alex Norton

The link to the paper is now broken, but it can be found here if anyone's looking for it: http://are.berkeley.edu/fields/erep/seminar/s2011/Prius_Effect_V1.5.3.pdf

Anders

I am interested in the basis for concluding that people would install solar on a roof facing the street even if this is not optimum in terms of sun.

I am working with a 250,000 observation dataset which tells a different story: We see a REDUCED likelihood of solar adoption for houses with south facing roofs towards the street. So, the opposite. Granted, this might then be caused by a "solar is ugly" motivation, but it does at least suggest that the idea that individuals would make a completely stupid investment in solar for the sole reason of "green status" is perhaps not entirely as straightforward as sometimes portraited.