23 April 2009

Behavior Modification

JWT sent this:
David, Here is my April water bill from the City of San Clemente:

Water base fee $8.38
Water consumption 6.52 (4 units Tier 1 @$1.63)
Sewer base fee 18.30
Sewer commodity 11.50
Storm drain 2.96
Clean ocean fee 5.02
________
TOTAL $52.68

So the question for today is this; How much higher will the $1.63 consumption price have to rise before, I, or anyone, will make serious changes in behavior vis-a-vis what ever they are doing today?
Here's my answer: You don't need to modify your behavior. Even better, your bill is about 12 percent variable and 88 percent fixed. That means that your revenue pattern is very closely matched with San Clemente's cost pattern, a goal that I supported here.

Bottom Line: Those who are already using water wisely (JWT and wife used 100 gal/day, which is way below the SoCal average of 100+gal/day/capita) do not need to modify their behavior.

8 comments:

Eric said...

Clean ocean fee and real numbers

What does $5.02 of clean ocean fee buy? Is it picking up trash from the beach, running ocean water through sieves, or ?

I have realized that much of the climate discussion that I have seen seems to be predicated on three or more things.

1. Everyone has extra money lying around with which they will pay higher water or utility fees.
2. Increased prices have no cost. So, if my company has an increased water or power bill (e.g. an aluminum smelter), my company does not have to raise prices or layoff workers.
3. Other countries, e.g. China, will change their behaviors in ways that help Americans such as by lowering their use of coal and raising the price of their exports.

Are there serious quantitative models that predict what will happen if prices, for instance water prices, change dramatically in a community or locality? Do people just use less water or do they move? How many people are laid off, company by company? Does money for water come out of money for a new car or money for medical insurance?

I would like to think that someone is making these predictions and making them in detail, including the couplings between one expenditure and another. If someone is making these kinds of detailed quantitative economic predictions, I would like to know who it is and what they predict.

Where should I look?

Eric said...

The lack of clear quantitative economic data is starting to make me think of Enron, Bernie Madoff, Fannie Mae. These are not comforting thoughts.

David Zetland said...

Eric -- good point, but you know (as I do) that simulations can deliver any result you want.

If you want 1 + 2 + 3 results, I can build a model for yoU!

My impression is that we need to address shortages NOW. There WILL be a decrease in demand (since elasticity is <0.00), but businesses will NOT move. (Water is <2% of monthly hh bill, and the same for MOST businesses.) If water cost drives a business (e.g., bottled water plant or food processing) to leave, we may want to ask if that business was really contributing to the local economy.

My bottom line is that water waste is getting so costly (in social terms) that ending the distortions is worthwhile -- even if it changes people's behavior...

Eric said...

David,

The simulations that I have built, for mapping the human genome and for predicting the toxicity in humans of potential new drugs, were as accurate as I could build them and gave outputs measured in posterior odds for an hypothesis and in the standard error of these odds.

Not surprisingly, I want the same kind of detail here. At the moment, I am most sensitive to large scale ideology that hurts a lot of people and for which the ideologues do not seem to consider the actual consequences, person by person, of adopting their proposals.

I guess my engineering side is showing. If the consequences of a policy are mostly predictable, I want people to predict them and then tell me the predictions.

In that spirit, here is one for you. How might the people within 100 miles of Berkeley get to 100 gcd of water? What would the micro and macro economic consequences of this be? What are the posterior odds of such a thing occurring if we include the known behaviors of the relevant political bodies?

Thanks,

David Zetland said...

Eric,

Humans -- unlike atoms -- are unpredictable in the sense that they change their behavior in unexpected ways. That's why I talk about "raise prices" first, without worrying about where reductions occur -- unlike most engineering simulations.

Eric said...

David,
I did not explain my simulations much. They work differently than the engineering ones that you may be familiar with. The ones that I write are usually statistical, often Bayesian.

In these simulations, the answers come out as ranges not specific numbers.

Often, the specific numbers (there are two gallons of usable water 3.75 feet west and 6.87 feet south of David's office) are not known. A more general statement (there is between 100 and 200 gallons of usable water within 100 feet of David's office)is often known with certainty. The second statement may be all that is needed.

The same approach can be used for a lot of human behavior. You can't say that a particular human will reduce her water consumption to 100.6 gcd but you can say that this city of 100,000 can be induced to reduce their water consumption per person from 350 gcd to between 120 and 170 gcd.

These approximations are the best that you can get. They are also sufficient for making policy.

There are well done simulations and poorly done simulations. I try to pay attention only to the well done ones.

P.S. In order to make predictions about atoms, quantum mechanical predictions, you have to do the same averaging, usually over lots of atoms.

David Zetland said...

Eric -- very interesting. We should talk about those sometime. (Perhaps I can help with priors...)

Eric said...

David,
That would be fun.