When is efficiency not efficiency? When the government claims to achieve it.
The U.S. Department of Energy has just announced a proposed rule to make dishwashers more “efficient” by limiting them to a maximum of 3.3 gallons per wash cycle, a reduction of one-third. (A similar Obama-era rule had sought to limit the machines to just 3.1 gallons, but that was nixed by the Trump administration and replaced with a rule allowing up to 5 gallons per cycle.)
The implicit perspective of the DOE is that reduced use of resources is necessarily a gain in efficiency. But efficiency is not achieved just by using less of some resource. It is about the ratio of costs (the value of resource inputs) to benefits (the value of the output). If the benefit is reduced by more than is saved by reducing costs, there is no efficiency.
The most intuitive type of efficiency gain is when the benefit remains the same (or even increases) while the costs are reduced. But it is in fact possible for a reduced benefit to be efficient if it is adequately offset by the reduction in costs. But we can only recognize either of those outcomes as efficient by looking at both costs and benefits–we can’t identify efficiency solely by observing a reduction in costs.
This mistaken idea of efficiency, if applied to home construction, would argue for reducing the amount of wood used in construction by changing the spacing of wall studs from 24” to 48.” Think of the efficiencies, the tremendous savings in materials costs! That is, until your house blows down in a stiff wind, revealing an excessive reduction the net value of the home.
The problems for low-water dishwashers are that 1) the benefit is reduced, while 2) for multiple reasons their costs are not reduced as much as a first-order perspective would assume.
First, on the reduction in benefit, a study done by a coalition of manufacturers trying to comply with the Obama-era rule found that the low-water models did not completely clean the dishes, leaving food stuck to plates. It hardly needs to be said that this is a lower benefit to dishwasher owners than having their dishes come out completely clean. Even Consumer Reports found that dishwashers required 4–5 gallons per cycle to clean heavily soiled loads.
Advocates of low-water dishwashers might dismiss the industry study as just reflecting big businesses’ resistance to change. But industries naturally seek efficiencies, not just to reduce their own costs, but to appeal to customers. Any manufacturer that could promise clean enough dishes at lower costs would win customers away from competitors. When businesses can achieve efficiencies that really benefit customers, no regulation is needed. And as a matter of fact, the amount of water used by dishwashers has declined by roughly half over the past 20 years, not due solely to regulation.
Second, the costs (the resources that are used to clean dishes) may not be reduced as much as expected, because in addition to water, energy is required to run a dishwasher. And so far, the only way manufacturers have found to reduce water use while still achieving satisfactory dish cleanliness is to run longer cleaning cycles, using the same water multiple times to get food gunk off your plates. But longer cycles take more energy, adding a cost increase to the equation.
Perhaps recognizing this, or perhaps just seeking cost reductions wherever they can, the Department of Energy also proposes a 30 percent reduction in dishwashers’ energy usage. But while this would further reduce the costs–at least on a per cycle basis–it adds to the probability that the benefit, the cleanliness of dishes, will be further reduced. So, it is far from clear that reducing energy usage will produce efficiency gains, either.
Also, a rule like this creates perverse incentives that tend to undermine it. If consumers are not satisfied with the results of a single run through the dishwasher, they’ll simply run their dishes through a second cycle, using more water and more energy. Because the mandated reductions are less than 50 percent for both water and energy, a second run means a net increase in the use of both to produce the same consumer satisfaction achieved by a single run today.
An alternative to running the dishwasher twice might be to handwash the dishes first, at least the dirtier ones with more stubbornly stuck-on food. This also, however, counteracts the savings in water and energy usage. But even more, it presents a new resource input, human labor. And it’s precisely because labor is costly that people buy dishwashers in the first place.
But advocates of environmentally progressive regulation are not as enamored of labor-saving devices as economists are. To economists, labor is a resource that is to be used efficiently, just like any other resource. But to environmental progressives, this type of labor is not seen as a cost, just as they don’t see that a real cost is imposed when people are required to sort their recyclables into different streams. So while they might cringe at the amount of water used to prewash dishes, they don’t care about the time and effort it takes.
There’s a great irony here, in that they not only tend to think labor in the marketplace is criminally underpriced, but they would also certainly agree that traditional, unpaid, “women’s work” in the home has always been undervalued. And yet essentially forced, uncompensated, human labor for the purpose of replacing other resources has no value in their analyses.
Efficiency is a good sales pitch, though. While most people couldn’t properly define it, they have at least an intuitive sense that it’s a good thing. They certainly want to maximize their own benefits relative to their own costs. So whether the sales job is by private firms trying to persuade you to buy their dishwasher or by government regulators trying to persuade you to buy into their policies, efficiency is usually recognized as a desirable thing.
But while it’s good to be skeptical of the claims of both private and public salesmen, it’s more likely that the private firm has found real efficiencies, because at least they know what the word means.
Made available by the American Institute for Economic Research.
