Ezra Klein channels his econ-geek and laments that price signals don’t tell the whole story these days:
…we hope that prices include the relevant information. That’s been the goal of the environmental movement’s effort to build the cost of carbon emissions into the price of goods. Rather than asking each consumer to act as a climate scientist when wandering through Costco, the climate change community is trying to let them act as a consumer.
It’s a fair point. These days we can promote labelling and the dissemination of information, but all information processing takes time. What’s the difference between free-range, organic and eco-friendly eggs? Does the SPCA standard mean they’re free-range or just that they’re not battery hens? Is organic meat humanely slaughtered? Were the cattle raised on a farm that pollutes the local stream? Figuring all that out would take up a fair bit of time and I’m sure there are things I would miss.
The point is that the proliferation of voluntary standards and labelling can eventually become overwhelming to the point that it’s meaningless to consumers. And they shouldn’t have to try to figure that stuff out. Using economic instruments to internalise harm in the production process allows consumers to just pick out the best value product and be safe in the knowledge that they’re not killing the planet. And then I would blog about stuff other than the environment 😛