Symbolic Acts

Visiting with my wife's relatives for Christmas, I noticed the label on their "natural" laundry detergent. It informs the customer that he is making a difference—if every household in America replaced one large (50 load) bottle of petroleum based laundry detergent with their vegetable based product, it would save enough oil to heat 19,500 homes.

I have no idea whether it is true; what struck me was how tiny the effect boasted of was. On a wildly unrealistic assumption of how many people switch to their product, it will save enough petroleum to heat about one home in five thousand. Restating the claim in individual terms and assuming that the average family does two loads of laundry a week, using the vegetable based product instead of a petroleum based one, saves an amount of oil equal to less than a tenth of a percent of that family's home heating consumption. Roughly speaking, and depending on where they live, that's equivalent to the savings from turning the thermostat down by a few hundredths of a degree.

There are three possible interpretations of the effectiveness of such a claim, assuming that it does encourage people to buy the product:

1. People really do care about such small effects.

2. Many customers don't intuit mathematics very well. 19,500 is a large number, it doesn't occur to them to compare it to the entire housing stock or to scale down the effect from every household in America using the product to their using the product, so they believe they are actually saving a substantial amount of oil.

3. Customers are making their decision on the basis of symbolism, not consequences. The question is not "how much oil does it save" but "does it save oil." Saving oil is good, so one should do it.

One of the nice things about a price system is that it presents calculations of that sort in a form both more easily understood and more immediately relevant to the consumer. Not using a certain amount of oil reduces the cost of producing the detergent by, say, six cents. Using alternative inputs raises the cost by, say, five cents. So, in a competitive market, the vegetable based product will be a cent cheaper—or more expensive, if the numbers go the other way. The consumer can then decide whether other differences between the two products do or do not outweigh the price difference.

The price system isn't perfect; external costs and benefits get left out of the mechanism that determines price, so the signal isn't entirely accurate. But alternatives to measuring costs and benefits via price require getting people—consumers voluntarily, as in this case, or voters and politicians making decisions for consumers—to substitute some alternative mechanism. As this particular example suggests, that alternative is likely to be enormously less accurate, off not by ten or twenty percent but by orders of magnitude.

A second point that occurs to me is that my third alternative, deciding on a symbolic rather than consequentialist basis, may not be quite as crazy as it at first seems. It is, after all, the way many people, myself among them, often think about moral issues. A small lie is still a lie, a small theft still a theft, and both are to be condemned not only on the basis of their consequences but also because they are, somehow, wrong in themselves.

So perhaps I shouldn't be quite so quick to condemn as irrational people who are interested in whether they are saving oil, not in how much oil they are saving, still less in any estimate of what the value is of saving that amount.