When It Comes to Light Bulbs, Government (Thinks It) Knows Best

This year marks the complete phase-out of the traditional incandescent light bulb. Starting on January 1, it effectively became illegal to manufacture or import the good old-fashioned light bulb in the United States, though stores are still allowed to sell down their pre-existing inventories. Specifically, provisions in the 2007 Energy Independence and Security Act phased in energy-efficiency standards for light bulbs of various wattages that incandescent bulbs can’t achieve. The government is thus forcing Americans to switch over to CFLs (compact fluorescent lamps) and LEDs (light emitting diodes). A USA Today article from right before the ban took effect provides some comic relief—unintentionally—on the weak rationale for the policy.

Early on, the author Jolie Lee says, “Energy-efficient bulbs cost more than incandescent bulbs but last much longer and save on energy costs in the long-term,” but then goes on to ask, “So why are people still buying incandescent bulbs and what will the phaseout mean for you?”

Even though it might not have been her intention, Lee actually gives some good reasons that American consumers are resisting the conversion. For example, the much ballyhooed efficiencies actually don’t translate into immediate economic gain:

An incandescent bulb can cost as little as 70 cents. Meanwhile, a CFL bulb sells for at least a few dollars and an LED starts at $10 but usually runs around $20.

Despite the savings [in electricity costs], many still stick with incandescents because they typically don’t spend that much in the first place on lighting in their homes.

Home improvement store Lowe’s did a study comparing electricity costs of an LED vs. an incandescent bulb. Energy costs for the LED added up to $30 over the bulb’s 22-year lifespan. Energy costs for using an incandescent bulb over that same period added up to $165 – savings, certainly, but perhaps not significant enough for many homeowners over two decades to alter their buying habits.

Thus, even using the theoretical numbers from the article, using an LED versus an incandescent bulb would reduce electric bills by about $6.15 per year. If the cost of a traditional bulb is 70 cents while the LED runs $20, then it takes three years (even ignoring interest) for the LED to “pay for itself.” When we’re starting with such low expenses anyway—the incandescent bulb averages $7.50 per year in electricity usage, according to the numbers above—it’s easy to see why consumers haven’t been rushing into LEDs.

Furthermore, as we previously noted, to achieve these savings and a relatively quick payback, you have to use your new LED bulb for three hours per day. If you replace a 60-watt incandescent with an LED and only use it for 30 minutes a day, then it would take 14 years to pay off the LED bulb.

What would make sense is for large-scale businesses to switch over their lights, since they operate many lights, have long planning horizons, and thus can really significantly cut operating expenses over time. And that’s precisely what we do see: Even absent government mandates, plenty of businesses were swapping out incandescents for more energy-efficient and longer-lived alternatives, particularly in fixtures that were hard to access (such as the lighting for a mall or parking lot). But when it comes to, say, the bulb in a lamp in a residential home’s living room, it makes little financial difference to switch.

This brings us to yet another difference: color or quality of the light. The article explains:

Incandescents are known for their warm light, which looks particularly good against skin tones, Rey-Barreau [a lighting design professor at the University of Kentucky] said. On the other hand, fluorescent lights have gained a reputation for casting a harsh, bluish light.

Rey-Barreau goes on to argue that this view is now obsolete, because fluorescents can be matched perfectly with the light of the traditional incandescent bulb. Well, Rey-Barreau is the expert, but in my experience, the colors are different; I can still distinguish light from a traditional versus a new bulb, and the new light is definitely more “clinical” and less “comfy” than what we all grew up with.

So we see that the government is forcing consumers to buy bulbs in the name of energy efficiency even though the savings are modest for residential uses, and even though consumers might have a legitimate preference for the incandescent light. Here’s a radical thought: Rather than foisting their decisions on everybody, government officials could simply provide information to the public on the facts about energy usage, then let consumers make up their own minds.

But the federal government does not share our view that if you like your light bulb you should be able to keep your light bulb. So make sure to stock up at AmazoneLightbulbs.com, or wherever else you can find 75 and 100-watt light bulbs and 60 and 40-watt incandescent light bulbs.

IER Senior Economist Robert P. Murphy authored this post.

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