Paying Too Much for Energy? The True Costs of Our Energy Choices

33 Pages Posted: 29 Feb 2012 Last revised: 1 Nov 2014

See all articles by Michael Greenstone

Michael Greenstone

University of Chicago - Department of Economics; Becker Friedman Institute for Economics; National Bureau of Economic Research (NBER)

Adam Looney

Brookings Institution; U.S. Department of the Treasury, Office of Tax Analysis (OTA)

Date Written: February 24, 2012

Abstract

Energy consumption is critical to economic growth and quality of life. America’s energy system, however, is malfunctioning. The status quo is characterized by a tilted playing field, where energy choices are based on the visible costs that appear on utility bills and at gas pumps. This system masks the “external” costs arising from those energy choices, including shorter lives, higher health care expenses, a changing climate, and weakened national security. As a result, we pay unnecessarily high costs for energy. New “rules of the road” could level the energy playing field. Drawing from our work for The Hamilton Project, this paper offers four principles for reforming U.S. energy policies in order to increase Americans’ well-being.

Keywords: costs of alternative energy, energy externalities, health costs of energy, private costs of energy, reforming energy policy, social costs of energy

JEL Classification: I18, Q42, Q48, Q51, Q53, Q54

Suggested Citation

Greenstone, Michael and Looney, Adam, Paying Too Much for Energy? The True Costs of Our Energy Choices (February 24, 2012). MIT Department of Economics Working Paper No. 12-05. Available at SSRN: https://ssrn.com/abstract=2010862 or http://dx.doi.org/10.2139/ssrn.2010862

Michael Greenstone (Contact Author)

University of Chicago - Department of Economics

1126 East 59th Street
Chicago, IL 60637
United States

Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Adam Looney

Brookings Institution ( email )

1775 Massachusetts Ave NW
Washington, DC 20036
United States
2027976068 (Phone)

HOME PAGE: http://www.brookings.edu/experts/looneya.aspx

U.S. Department of the Treasury, Office of Tax Analysis (OTA) ( email )

1500 Pennsylvania Ave. NW
Washington, DC 20220
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
584
rank
42,591
Abstract Views
2,378
PlumX Metrics