Economists call for price cap on energy

Irene van Staveren

A group of prominent economists, including Irene van Staveren of the International Institute of Social Studies, is calling on the government to impose a price ceiling on energy. They say that such a ceiling has drawbacks, but that we should weigh them against the costs of doing nothing: a large increase in uncertainty, stress, debt and poverty.

In the opinion piece in de Volkskrant, they write: "Economists usually think governments should stay away from price interventions and provide support through income policies. However, there are good reasons to look at the market for an essential product like energy differently. With income support proving unworkable, governments will also have to consider instruments such as a temporary price cap on sales to consumers."

Debt, rising healthcare costs and poor school performance

They are not just looking at the numbers here, but at inclusive prosperity in society. Indeed, the high price of energy is hurting that. "Not acting means a big increase in insecurity, stress, debt and poverty. This can have major negative consequences for society. Think declining school performance, increasing healthcare costs and greater reliance on municipal services. Preventing such a scenario pays off handsomely."

Concluding, "While a price cap has drawbacks, we have to weigh them against the cost of inaction. A price intervention is an acceptable tool if alternatives are not available." 

Read the entire article in de Volkskrant (in Dutch)

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