NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Responses to Recycling Laws and Bottle Deposits

In states without either stringent recycling laws or bottle deposit laws, respondents recycled 4.4 bottles out of 10. In states with deposit laws and stringent recycling requirements, respondents recycled 8.3 out of 10 bottles.

Plastic water bottles can be disposed of in at least three ways: curbside recycling, returning the bottles for deposits, or simply placing them in with general trash. The decision to recycle is affected by the opportunity cost of one’s time and “the warm glow environmental benefit…that the consumer derives for each bottle recycled whether at the curb or returned for deposit," according to W. Kip Viscusi, Joel Huber, Jason Bell, and Caroline Cecot, writing in Discontinuous Behavioral Responses to Recycling Laws and Plastic Water Bottle Deposits (NBER Working Paper No. 15585).

With the exception of Michigan, where the rate is 10 cents per bottle, states with deposit laws require a 5-cent deposit. The high fixed costs associated with recycling lead to the theoretical conclusion that responses will be discontinuous: that is, people will either recycle almost all of their plastic bottles or almost none of them. Using data from a 2008 web-based survey administered to a nationally representative sample of 2,550 people who were asked “Out of every 10 plastic bottles, how many would you say that you recycled or returned for reuse?” Viscusi and his co-authors confirm that theory with evidence.

On average, the individuals surveyed reported recycling 6 out of 10 plastic bottles. In all, roughly 30 percent of the people in the sample recycled no bottles while 41 percent recycled all bottles. In states without either stringent recycling laws or bottle deposit laws, respondents recycled 4.4 bottles out of 10. In states with stringent recycling, respondents recycled 6.1 out of 10 bottles. In states with deposit laws and stringent recycling requirements, respondents recycled 8.3 out of 10 bottles.

The authors conclude that state bottle deposits and recycling laws foster recycling behavior, and that more stringent recycling laws increase recycling rates. On balance, having both deposits and regulations in place increases recycling. The empirical estimates suggest that people living in urban and suburban areas recycle more, as do people living in the Northeast. Concern about the environment and higher incomes increase recycling -- so does increasing age and residence in a larger household.

-- Linda Gorman

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