Freakonomics and the Jevons Paradox

bulb-15629_1280Do Energy Efficiency Improvements Make Us Use More Energy?

I was quite intrigued this week by the latest podcast offering from Freakonomics. Aside from their somewhat insulting “discovery” that the study of the environment isn’t diametrically opposed to that of economics (a conversation for another day), they put forward an engaging analysis of the effectiveness of energy efficiency. Their discussion centered around the work of Arik Levinson, an economist at Georgetown University. The gist of Freakonomics’ argument, based on Levinson’s work, is that California’s 1978 residential energy efficiency regulations did not result in a decrease in per capita electricity use, and that the differences between energy use in California and other states can be explained by a particular manifestation of the rebound effect: the Jevons paradox.

The podcast chronicles Levinson’s research on the impacts of these building codes, which was recently published in a working paper by the National Bureau of Economic Research. For the study, Levinson analyzed data around California’s housing regulations in three different ways. He says it best in his own words:

First, I compare[d] current electricity use by California homes of different vintages constructed under different standards, controlling for home size, local weather, and tenant characteristics. Second, I examine[d] how electricity in California homes varies with outdoor temperatures for buildings of different vintages. And third, I compare[d] electricity use for buildings of different vintages in California, which has stringent building energy codes, to electricity use for buildings of different vintages in other states.  All three approaches yield[d] the same answer: there is no evidence that homes constructed since California instituted its building energy codes use less electricity today than homes built before the codes came into effect.

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Lies, Damned Lies, and Statistics

Why you should always be willing to ask questions about what is presented to you.

I’m currently working on a post around Freakonomics’ latest podcast, “How Efficient is Energy Efficency?” I will have that post up sometime in the next few days, but in my research for the post I ran across an insight that I thought was important to share about how we present and challenge information. The podcast centers around the work of Arik Levinson, an Environmental Economist at Georgetown University. Two of his papers in recent years have focused on energy efficiency regulations for housing in California. The standard narrative is that because California enacted energy efficiency standards for all new houses starting in 1978, it has lead the nation in electricity reduction. This narrative is represented most clearly by the following graph:

Residential Electricity Per Capita. From Original Academic Article Here.

Residential Electricity Per Capita. From Original Academic Article Here.

Wow! Look at that difference and how dramatically California separated from the rest of the nation right in the 1970s!

People have gotten really excited about this graph. If you want to see how many groups have referenced it, take a look at the Google Image results for searching “California 1970s energy efficiency.” The National Resources Defense Council, Scientific American, and the World Bank (on page 215) are just a few. Each of these organizations has made California and their energy efficiency standards out as some major hero. I am not going to cast doubt on the accuracy of these numbers themselves and so, I believe, they display some useful truths about the nature of California’s energy consumption profile. However, no matter how much truth is represented in this graph, I believe that it serves to cloud the discussion rather than illuminate it. Continue reading