NOx standards on new vehicles in LA

In the summer I listened to an EconTalk podcast with Prof. Robert Frank of Cornell University. The podcast can be listened to here. Consider this statement from Robert Frank:

"In Los Angeles, in order to meet the air quality targets they were shooting for, they had to adopt stringent nitrous oxide (NOx) requirements on new vehicles because they were unwilling to have old vehicles comply with the pollution requirements--mostly low income drivers drive the old vehicles and it was thought to be too onerous to require them to comply. So we ratcheted up the requirements on the new cars to meet the target and it was about $900 a pound to get all the NOx out of new cars--all the low-hanging fruit had already been picked in that domain--so for the inevitable democratic impulse to shield poor people from hardship we ended up spending $900/pound to get NOx out of the air, whereas if we had forced older vehicles to come into compliance we could have gotten that same pound out for $10. Way cheaper over all if we'd taxed wealthy motorists in California a little bit extra and given a voucher to poor motorists, who would turn in their old cars and buy a 5-year old Toyota Corolla or some other compliant vehicle."

The example above relates to the content of a class I am taking called "Environmental Policy Analysis".We talked today about pollution standards and how they could be inherently more inefficient in terms of social and economic costs. If we wanted to improve air quality for everyone (using the LA example), then it would be more sensible to tax the wealthier motorists so that enough money could be re-distributed to lower-income drivers to purchases cars that are less intensive in terms of NOx. This would be a much less expensive way to alleviate pernicious pollutants that cause respiratory illnesses. Standards are helpful but when considering overall economic costs, there are more efficient and equitable ways of doing it. Yes, this is also a political game, but political games such as these ones can make everyone worse off.

More to come on risk management, environmental policy and how to improve decisions that make everyone better off.