"Household Responses for Pricing Garbage by the Bag,"

Abstract

This paper estimates household reaction to the implementation of unit-pricing for the collection of residential garbage. We gather original data on weight and volume of weekly garbage and recycling of 75 households in Charlottesville, Virginia, both before and after the start of a program that requires an eighty-cent sticker on each bag of garbage. This data set is the first of its kind. We estimate household demands for the collection of garbage and recyclable material, the effect on density of household garbage, and the amount of illegal dumping by households. We also estimate the probability that a household chooses each method available to reduce its garbage. In response to the implementation of this unit-pricing program, we find that households (I) reduced the weight of their garbage by 14%. (2) reduced the volume of garbage by 37% and (3) increased the weight of their recyclable materials by 16%. We estimate that additional illegal-or at least suspicious-disposal accounts for 0.42 pounds per person per week, or 28% of the reduction in garbage observed at the curb.

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“…The effect of Table 2 is close to the estimate of Fullerton and Kinnaman (1996), a decrease in volume of about 37%. However, the authors find that in terms of weight this estimate is significantly smaller.…”

“…Cross-sectional comparisons may thus underestimate the policy's effectiveness. 6 Time-series analyses for the same community, as in Fullerton and Kinnaman (1996), do not face this issue, but, absent any control group acting as counterfactual, estimates may be biased by trends (i.e. simultaneity).…”

“…Non-tax policies (as the ones we observe in our context) may also affect the amount of solid garbage produced by households. In Fullerton and Kinnaman (1996), the authors collect data for other communities, regarded as similar, in an attempt to correct their estimates.…”

“…We stress in particular the rivalry in waste management, since any additional bag of garbage or container generates additional costs to the community. Furthermore, it is possible to attribute the costs of waste collection to the single household causing them, for instance with the use of special bags (Fullerton and Kinnaman, 1996). Pricing garbage by the bag allows attributing to households their share of waste management costs, following the polluter pays principle, well-known since Pigou (1920).…”

“…Taxation may also have a short-lived effect on behaviour, with no longlasting impact on recycling. Second, people may think unit pricing is ineffective, or unfair, for instance due to its potentially regressive nature (Fullerton and Kinnaman, 1996;Husaini et al, 2007).…”