TOPICS: Economics, Pricing StrategySUMMARY: The economics of trash is an important issue for cities with limited space in landfills or the prospect of significant increases in the cost to haul trash to incinerators at other sites. Plymouth, Massachusetts wants to adopt a pay-as-you-throw or PAYT system. The prospect seems unpopular with residents and the selectmen recently voted to hold off overhauling the trash system for another year. The plan involved charging for the bags residents would be required to use to throw their trash out at transfer stations. The town has no room left in its landfill and sends trash twenty miles to an incinerator. There are many objections to the plan. Senior citizens worry they will have to pay more and some think it will penalize large families. The town faces significant increases in the fees it has to pay to have trash hauled off and incinerated so the goal was to try and change the behavior of residents in advance of the higher costs.CLASSROOM APPLICATION: The economics of garbage provides insights into strategies that can change behavior. People create garbage and cities have to figure out how to dispose of it. A long tradition of trash removal at low cost and with few restrictions has pressured the ecosystem. Cities need to motivate residents to change their trash habits and recycle. The idea is to make it more difficult and expensive to get rid of trash by tossing it in the garbage. Cities make residents buy special bags, tags or cans for their trash but haul away recyclables for little or no cost. PAYT cities find their residents can get creative. The Seattle stomp is used to compact huge amounts of trash into a single can or bag. Other cities find illegally dumped refuse increases when they implement economic systems to make traditional trash collection or disposal more expensive.QUESTIONS:1. How do financial incentives or costs affect behavior? Why use money as either an incentive or cost to motivate change?2. Give one example of how consumers changed in response to finance incentives or costs. Here is one example, you think of another The drop in miles driven once gas prices increased. Now yours3. In the past, residents of other cities changed their behavior in response to PAYT but not necessarily in ways cities had hoped. Describe what happened and why it was a problem.4. Why dont all cities, including the ones in this article, just require recycling of trash and yard waste like the City of Seattle?