Dumbest Blog Post of 2011

Karl Smith on ignoring climate change.

My nomination (within a circle of prima facie grownups who should know better, omitting children and wingnuts) goes to economist Karl Smith´s post of 2 December on climate change. This is bravely entitled ¨In Praise of Dirty Energy: There Are Worse Things Than Pollution and We Have Them¨.

We should pursue the development of fossil fuels as rapidly as possible including looking for ways to streamline regulation in North American regarding fossil fuel production. …
However, even if we have to face the warming, we face it in the future with a much richer and more progressive world. …
100 years is a long time in the industrial age. However, it is simply forever in the information age. There is an extremely high chance that the very nature of human society itself will have changed by that time in ways that render this entire issue moot.

Read the whole thing as a fine example of yahoo values, data-free scaremongering and reckless optimism, and an indifference to economic reasoning.

The last paragraph cited is self-refuting. It´s very likely to Smith that humans will stop needing food, transport, consumer durables, heating and cooling, and shelter because of an unspecified information singularity, as in Charles Stross´ SF romp Accelerando. On the other hand, the risk of population losses on a genocidal scale as a result of well understood and carefully modelled climatic processes can be ignored.

The second paragraph at least reflects an actual argument. Future generations will very probably be richer and better able than us to afford the costs of adaptation and mitigation. However, this depends on how much. Faced with a trend in damage and adaptation costs rising to infinity, there is some point at which we should spend the money to mitigate. The equilibrium depends on the cost curves and the discount rate. You need a model to work it all out and infer whether the date is in the future (Nordhaus) or has already passed (Stern).

Amazingly, there have actually been attempts by economists to think about this: Stern, Quiggin (eg here), Weitzman, Nordhaus. Professor Smith is a professional economist. It´s very curious that he does not think it worthwhile to use the tools of economic analysis to address the most important question of public policy of our generation.

For example, one key issue in the debate. The use of high rates of time preference, rather than Stern´s and Quiggin´s near-zero, leads to discount rates of 5% or so. These imply a morally unacceptable indifference to the fate of our grandchildren, many of whom will still be alive in 2100 – their incomes and costs valued today at 1.04c on the dollar if we accept 5%.

As it stands, Smith´s Micawberish paragraph simply illustrates the bounded rationality of risk-seeking aversion to losses : to avoid a certain loss, people will take substantial risks with an expected negative value exceeding it – though they would not take symmetrical risks to secure an equal gain. The fact that mitigation now involves modest costs to the lifestyle of Americans including Professor Smith is to him sufficient (un)reason to gamble his and my grandchildren´s lives to avoid it.

Loss aversion – an observed fact of human nature – leads to a paradox. Consider the equilibrium reached by a standard rational utility model. We suppose, following Nordhaus rather than Stern, that it´s in the future. At that point, the rational thing to do is to launch the crash mitigation programme. (It is all about mitigation; the adaptation costs are a trivial consequence of our mitigation policy, whether action or inaction.)

The costs of this programme at that date are necessarily higher than they would have been under a mitigation-now scenario, as long as the inefficient early-start measures have some positive effect. But generation z will be richer than us, so they shouldn´t mind, right? Their marginal utility of money will be lower than ours.

Not so, according to Kahneman and Tversky´s empirically grounded prospect theory. Welfare gains are losses are evaluated relative to a changing baseline. The higher costs of mitigation will therefore be taken very seriously. In fact, there´s a very good chance generation z will simply repeat our own buck-passing loss-aversion analysis, and kick the can down the road to the next generation. Ainsi de suite, until catastrophe.

A form of reasoning that allows an avoidable catastrophe is unsound, however much it´s embedded in human nature. The duty of scholars is to fight our cognitive illusions, not to parrot them.

* * * * * *

Wishing all our readers a fulfilling and enjoyable 2012 – and the same to your grandchildren and great-grandchildren in 2112.

Author: James Wimberley

James Wimberley (b. 1946, an Englishman raised in the Channel Islands. three adult children) is a former career international bureaucrat with the Council of Europe in Strasbourg. His main achievements there were the Lisbon Convention on recognition of qualifications and the Kosovo law on school education. He retired in 2006 to a little white house in Andalucia, His first wife Patricia Morris died in 2009 after a long illness. He remarried in 2011. to the former Brazilian TV actress Lu Mendonça. The cat overlords are now three. I suppose I've been invited to join real scholars on the list because my skills, acquired in a decade of technical assistance work in eastern Europe, include being able to ask faux-naïf questions like the exotic Persians and Chinese of eighteenth-century philosophical fiction. So I'm quite comfortable in the role of country-cousin blogger with a European perspective. The other specialised skill I learnt was making toasts with a moral in the course of drunken Caucasian banquets. I'm open to expenses-paid offers to retell Noah the great Armenian and Columbus, the orange, and university reform in Georgia. James Wimberley's occasional publications on the web

10 thoughts on “Dumbest Blog Post of 2011”

  1. as a result of well understood and carefully modeled climatic processes

    “Reality based community”; What a joke. Anybody who says climatic processes are well understood is well into cloud cuckoo land.

    1. The bits we don´t understand and can´t model properly are the positive feedbacks, like methane release from permafrost, which are not helpful to denialists like Brett and Micawberists like Smith. As I understand it – do correct me if if I´m wrong, with links – the mainstream models assembled by the IPCC don´t need these fedbacks to make the predictions of unacceptable outcomes on a BYU scenarios by 2100. In these models, the uncertainties lie in the parameters. Their values are heavily constrained by the physics (clear since Arrhenius) and the need to fit the historical data going backwards, but there´s still a little wiggle room. Asking for THE model is a mere polemical strategy.

      1. I think (and no, I don’t have links) that feedback generally is not well-enough-understood to be described as well-modeled. This is (to my recollection) true both for positive and for negative feedback, even at the order-of-magnitude level.

        1. Too day-after-New Year’s to look it up, but “well-modeled” should be defined. Nonetheless, several current models from two decades ago are quite accurate in describing today’s conditions (e.g. Hansen medium scenario) and in hindcasting past climate to half a century. There is an entire website (CMIP) that documents the parameters and output of climate models.

          That is: they are close enough for broad policy outlines. Now if we can only find some leaders to enact some broad policies…I wonder where we can find such leaders…

          1. Curve fitting, (Which is essentially what these models are, given the number of empirically derived parameters in them; They are NOT derived from fundamental physics, in many important respects.) may produce good results over the range of validity of the input data, but it represents neither understanding, nor a guarantee of validity outside the range of the data fitted to.

  2. I’d just add that Matthew Kahn does the same sort of econoglib ‘analysis’.

    IMHO, there’s a professional handicap that economists have here, in that the models all lead to conclusions which are politically incorrect in economics.

  3. I’m in general agreement, save for the assertion about future generations and “richer”. I don’t know how the earth would supply enough resources and – more importantly – absorb the wastes of a richer human population of, say, 9B. Surely the 1% could be richer but the poor beleagured biosphere coping with more humans who are richer than now?!?!

  4. I would add to Mark that Matthew doesn’t do any better here. And I’d rate him the winner over Karl Smith in the hand-waving-away department.

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