Conspicuous Conservation as Costly Signaling

One of the things that evolutionary psychologists pay a lot of attention to is costly signaling. This is when an animal, human or otherwise, does something that is costly in terms of resources in order to send a signal to someone one else. When an antelope performs a series of unnecessary leaps in view of a predator, the animal is believed to be sending a message to the predator: I'm way too healthy for you to bother chasing.

Among human beings, costly signaling is also tied to cooperation and coalition formation. A conspicuous display of charity or a costly sacrifice to the gods sends the message that I am someone who fulfills his obligations and so I am a good potential partner. Our willingness to make large donations to charity is much lower when the gift is anonymous.

Economists have been aware of this for a long time. Conspicuous consumption is a term for spending a lot of money on something very visible precisely so that people will know how rich you are. It is a way of advertising your fitness as a partner to potential allies.

Economists Steven E. Sexton and Alison L. Sexton (brother and sister) have identified a delicious version of this, which they call conspicuous conservation. Sexton and Sexton examine the market for hybrid automobiles. Consider the latter:

Today Prius is the clear leader among 24 different hybrid models available in the U.S. In fact, 48% of the 290,271 hybrid cars sold in the U.S. in 2009 were Priuses. The success of the Prius can certainly be attributed to an aggressive and innovative marketing effort by Toyota and to the equity in the Toyota brand. However, national marketing effort does not explain why ownership increases in green communities disproportionately relative to other hybrid cars, conditional on the green attributes of the models. It does not explain why, for instance, Toyota Camry Hybrid ownership does not increase proportional to the Prius after conditioning on green attributes. Likewise, the Civic Hybrid achieves a green rating that is nearly identical to the Prius from a number of sources, including the American Council for an Energy Efficient Economy's "Green Book," yet the Civic is underrepresented in green locales.

The Prius is, as hybrids go, a very well designed car. The Sexton's point out, however, that its market share in "green locales", i.e., places where a concern for environmentalism is a strong cultural force, cannot be explained by its features or its marketing. What does explain it?

The answer is that, until recently, the Prius was the only hybrid that was instantly recognizable as a hybrid.

The unique design of the Prius is not accidental. Toyota executives instructed their designers to develop something unique, regardless of the quality of the styling. Prius design has been described as utilitarian as it seeks to maximize on aerodynamics. Still, its design made it unique among the class of green cars that also provide the comfort and performance characteristics to which consumers in the U.S. have become accustomed. When Toyota updated the Prius in 2009, it kept the outside styling virtually the same. The Honda Civic Hybrid and other hybrid models, in contrast, share body styling with the other trims in the model class that have conventional drive types. The Hybrid trims of these models typically carry only a badge on the side or rear of the vehicle indicating their type. The Prius has, therefore, historically provided the most powerful signal of the owner's affinity for the environment of any vehicle in the U.S.

The Prius' popularity is in large part a result of the fact that it sends a signal about the owner. I am, to quote South Park, a part of the solution rather than a part of the problem. I am the kind of person you want in your circle of friends. The Sextons call this "green signaling."

The Sextons have been looking into other examples of green signaling. This is my favorite from the Freakonomics podcast where I first heard about the Sexton's research.

A. SEXTON: One of the more common ones that we see here in California is people putting solar panels up on their house. In fact, there's a number of cited cases where people will put solar paneling on a shadier side of their house because it's the street side, so people will be able to see it.

Putting solar panels on the wrong side of your house so that they will be visible to the street is a classic case of conspicuous conservation.

It would be a fallacy to infer from this that the greens don't really care about the environment, but only about their image. I am sure that they do care. However, political passions are political. They result from evolved dispositions and they emerge in political contexts. People in Europe between 1618 and 1648 had to decide whether Jesus was a Catholic or a Protestant. The religious fervor that often accompanied that decision was no doubt genuine. Just as genuine was the awareness that one was choosing sides in a very bloody war and a major social/political reallignment.

No blood was shed when Honda finally caught on and produced a version of their Insight that looks just like a Prius. One thing that evolutionary psychologists have noted is that costly signaling can frequently be faked on the cheap. If you don't have the hybrid version of a car but want the green credit, you can always opt for the instant hybrid conversion kit. For a cool $4.99 you get a plastic hybrid tag to stick on your gas guzzler.

Comments

[Jon S.]

I must point out that a pair of Canadian philosopohers have already made this argument in this book:http://www.amazon.com/Nation-Rebels-Counterculture-Consumer-Culture/dp/006074586X

Their basic argument is that an elite/alternative/bohemian part of the population partakes in some behavior in order to give themselves the status of authentic individuals. This pose is then is marketed to people as a way to prove their authenticity bona fides. This is a way for us to purchase a kind of identity. In this way, they argue, the counter-culture promotes the consumer culture by making being a "rebel" a commodity to be bought. One can see this recently in the attempt by Jay-z to now market a series of OWS consumer items.

[Donald Pay]

Nothing new in this. It's how about 99.99 percent of new products or concepts get started. It's pretty dumb, though, to put a solar panel on the shady side of the house, and it wouldn't be done by any reputable solar company. Some of this is probably made up.

[Ken Blanchard]

Jon: buying products to signal virtue is certainly not a new thing nor is it undiscovered. One does have to keep testing one's assumptions, and the Prius story is a pretty good test.

Donald: you really think a solar company is going to refuse a lucrative contract because the client wants the solar panels where he wants the solar panels? Wow. I

[Donald Pay]

Any solar company that values its reputation is going to do the best to produce energy, not just have a decoration. Since there are tax incentives for installation of solar panels for energy production, anyone that installs solar panels as decoration would be subject to investigation and penalties through the IRS code. Many states now have regulations or guidelines for solar panel installation. Any fraudulent installation would risk state licenses. So, my guess is this is more a case of urban legend or a few unscrupulous installers.

http://www.solareducationcenter.com/pdf/State.pdf

[Ken Blanchard]

Donald: you mean like Solyndra? It's nice to learn that many states require that solar panels be installed by someone with a license. That tells us nothing relevant to the question. Sexton says that she knows this happens. I am inclined to believe her in the absence of evidence to the contrary.

[Stan Gibilisco]

Maybe some people drive hybrids to exude a "holier-than-thou" air, while nevertheless putting down a massive carbon footprint in other ways, such as with a 5,000-square-foot house.

I'd love to figure out a way to make green energy actually conserve money as well as reduce my carbon footprint. The problem is, in order to reduce the cost from month-to-month, one must usually spend a whole lot up front.

The tenants who rent from me have it figured out, I think. They can't afford a car, so they don't pollute in that mode at all, even indirectly. They live two miles south of Lead, yet they walk to work in Lead and Deadwood (or hitch-hike, sometimes). They burn wood for heat -- wood that would otherwise get burned anyway to thin the forest, so it doesn't increase overall carbon emissions.

They don't pretend to be holier than anybody, and yet, if green equals holy, they're a heck of a lot holier than I.

[Ken Blanchard]

Good post, Stan. I suspect that conspicuous conservation and conservation may be mutually exclusive.

[Donald Pay]

Hey, you put up a solar panel or two against code, and at most your energy savings is less than it could be and you're not generating as much energy as you could. Now, what happens when a nuclear plant or a deep water rig violates regulations? It's quite a bit more of a problem Let's not pretend "conspicuous conservation" is a huge problem. It's more a figment of the conservative imagination, than it is a problem.

[lynn]

The whole thing about hybrids or electric cars misses a huge point. Yeah, they aren't using as much gas. BUT they are using huge amounts of electricity, and just where do they think that electricity comes from for the most part? Coal, good ole American coal! Electricity is not usually green, unless it's maybe hydroelectric. How come no one mentions this little fact?

[Bill Fleming]

Good question, lynn. A couple of quick answers off the top of my head.

1. We don't rely on foreign nations to produce any of our electricity.
2. The development of electric cars represents a departure from petroleum based fuels.
3. Cars that run exclusively on electricity can be powered for about the same cost as it takes to run a refrigerator.
4. Electricity doesn't care where it comes from. One could in theory charge electric cars with solar panels, wind, etc.
5. It is a beginning of a new transportation/energy paradigm, not the final result.
6. America can either lead the way in the development of this technology, or let other countries do it.

[Ken Blanchard]

Bill: your six points are very revealing. 1. We don't get electricity from abroad. But we do get oil, which powers a lot of things. 2. No, unless you mean a shift from oil to coal and nukes. Electricity is a storage medium, not a source of energy. 3. I have no clue. 4. Yes, and then you have to charge the solar and wind power generators with subsidies payed for with other, more viable sources of energy. 5. Who knows? 6. Leading the way is a good thing is the way is a good way.

[Bill Fleming]

Ken yes.

1. It's a way to become less dependent on foreign oil.
2. Coal is not petroleum.
3. True. Especially for commuters (approx. 50 miles a day... see link.)
4. Only until the technology is scaled to meet market demand via MGF R&D. The oil companies will no doubt resist this. They should embrace it instead. They have the R&D money.
5. Don't you think we should find out?
6. See #5.

http://www.chevrolet.com/volt-electric-car/

[Ken Blanchard]

Bill: you believe in Santa Claus. I do not.