Should we invest to avoid snow days?

Although it's not been too bad in my area, the recent cold snap is another example of the extreme weather we've seen a number of times in recent years. But what does extreme mean in this case? This isn’t a hurricane. It’s extreme in the sense that it’s unusual. This weather would not faze the Finns or Swedes. They are equipped for this weather, so surely we too could avoid the loss of a work/school day by some investment.

But is such investment worth it? There are a few economic issues here. Initial thoughts might turn to the cost of ploughs and grit, and the cost of missed workdays (which could seal the deal on a potential “triple-dip”). But I want to consider the individual incentives. Firstly, the cost-benefit analysis is an individual one. Salaried workers may enjoy a paid day off in the snow; hourly or piece-rate workers may find the investment worthwhile. Should I (or someone like me) buy some chains? If I think the benefits outweigh the cost, then yes, probably. But what are the benefits? Whenever it snows I can go to work. Hurrah. But how many times will it snow? This expected use is a direct determinant of the benefits. How can I predict that? A couple of years ago I would have said fewer than one time a year, but it seems to me snow events are more frequent now*. I’m an economist, not a meteorologist. Add to this the opportunity cost issue of spending my scarce monetary resources, and the issue becomes cloudy. But hey, the chains are only of the order of £50-£100, so that’s probably worth it.

However, we have a co-ordination problem which will prevent most people from buying snow chains. My going to college is only worthwhile if it’s open, and it’ll only be open if enough staff and students have chains too. The use of chains then, may have a network externality. This is a double-edged sword: If enough people have chains, the positive externalities mean that it becomes worth it to buy some, but as we’re in an equilibrium where nobody’s got any, and nobody’s subsidising, providing or enforcing chains, there’s little point in an individual buying some. This double equilibrium is an example of path dependence – if we get towards one equilibrium (like Sweden), then that’s where we’ll be. It’s a co-ordination problem; a snowy prisoners' dilemma.

Thirdly, I may be reluctant to buy the required equipment precisely because of the unusual nature of this weather. It’s difficult to quantify how many times I’ll need them, and those times (after tonight) are likely to be some time in the future. How much do I care about any one day in the future? Not a lot – there’s lots of work days ahead (I hope) in my life, and I can’t quite be bothered to invest money now for some potential benefit and some indeterminate point in the future. Snow chains may well be a merit good, where the benefits are ignored.

So, will the UK get set up for snow, and make this sort of weather a part of normal life? No probably not, unless government were to step in. Whether it should or not is a different matter. Instead, we'll probably just carry on, being disrupted once or twice a year and grumbling about it.

*although, maybe I'm suffering from availability bias...