NCPA - National Center for Policy Analysis

Responses To Recycling Laws And Bottle Deposits

August 25, 2010

Plastic water bottles can be disposed of in at least three ways: curbside recycling, returning the bottles for deposit, 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 the National Bureau of Economic Research (NBER). 

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.  The NBER confirms that theory.  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?" 

  • 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 NBER concludes that state bottle deposits and recycling laws foster recycling behavior, and 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. 

Source: Linda Gorman, "Responses to Recycling Laws and Bottle Deposits," NEBR Digest, May 2010; based upon: W. Kip Viscusi, Joel Huber, Jason Bell and Caroline Cecot, "Discontinuous Behavioral Responses to Recycling Laws and Plastic Water Bottle Deposits," National Bureau of Economic Research, Working Paper No. 15585, December 2009. 

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