Why we still buy incandescent bulbs?

CFL (Compact Flourescent Light) delivers savings in two forms

  1. Longer life and hence savings from replacement costs
  2. Energy efficient leading to savings on operational costs

The lowest grade  CFL lasts  five times as long as a high quality, “long life” incandescent bulb and saves $36 over its lifetime in energy costs.  The  said CFL costs $5.22 and the long life incandescent costs $0.42 each. Even excluding opportunity costs of buying and changing light bulbs, that is a total savings of  $33 over five years. (Source WSJ)

This does not even address the environmental costs savings from using less energy.

So why do we still keep buying incandescent bulbs when the economics of a CFL are clearly better?  I think the answer lies in our we discount future benefits. If we are rational decision makers then  the present value of $33 will guide us to simply choose the CFL option.

We are not. We have the tendency to underestimate future benefits and hence value it lower than the value of an option with near term benefits. We read news stories, we understand the benefits of CFL but when it comes to the moment of choice our value curves switch and we pick the incandescent bulb which is priced at $0.42 compared to $5.22 for a CFL. George Ainslie called this the hyperbolic discounting, the same concept that is used to explain addiction and temptation. In some sense we give in to the temptation of the present and forgo future benefits because of our ways of discounting the future.

The EU and the US Governments have announced plans to phase out the incandescent bulb in the coming years. I wonder why wait a few years? Is it not time to put some Nudge to work? Why not take away the temptation that stems from higher near term benefit? The Governments should charge a very high tax on these bulbs, to bring their price close to that of a CFL. Anyone buying incandescent bulb even after  these highly taxed prices do really have a need for them and should be charged another price premium.

4 thoughts on “Why we still buy incandescent bulbs?

  1. Sorry, but I can’t agree with you. I am forced to use incandescent light bulbs due to the simple fact that I suffer from migraines. I am now finding it very difficult to get these “normal” lightbulbs, and as a result I am planning to do one simple thing when they get phased out. Simple, don’t use lighting. That, or stick it to them and use a 500 watt floodlight, reversing any green effect.


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