Social Econ Blog

Reading a column on Al Gore's new movie "An Inconvenient Truth," I was struck by this:

A Science magazine survey of all peer-reviewed studies on climate change showed that of the 928 independent studies done to date, (those not paid for by industry) all concluded that global warming is a real and growing threat.

There are no independent studies saying otherwise. Yet stories sampled from newspapers, television and magazines, show that 53 percent suggest global warming is unproven.

In that way, global warming is much like the evidence that tobacco caused lung cancer. For decades it was greeted by the industry, politicians, doctors paid to do ads and the media with unwarranted skepticism -- until everyone accepted that smoking makes you deathly ill.

Global warming is exactly the type of issue that we expect markets to fail to solve. It combines two classic forms of market failure -- externalities and public goods, so it shouldn't surprise us that there is a problem. Nor is it all that surprising that people are slow to warm up to the scientific evidence saying there is a problem. Dealing with the problem may impose costs on me. So as long as there is someone out there telling me that the problem is not real (i.e., I don't have to incur costs), I am happy to believe them. The bigger the cost to me, the more skeptical of the evidence I will be.

If the costs to me associated with fixing the problem are likely very large (i.e., I am an industry), this simple model suggests that I should pursue two courses of action. First, I should fund "studies" which suggest that the problem is not real (i.e., the marginal benefits of policies to fix the "problem" are zero). Second, I should make sure lots of people think that policies to deal with this problem are extremely costly so that they are inclined to dismiss the evidence. E.g., you will lose your job and the economy will collapse if these policies are pursued (i.e., the marginal cost of fixing the non-existent problem is huge).

I grew up in the midst of one of the most contentious of these debates -- the spotted owl controversy. In the late-80s, environmentalists sued under the endangered species act to stop logging in the habitat of a threatened species -- the northern spotted owl. All of the elements discussed above were on full display throughout this period. First, loads of stories were produced suggesting that there were plenty of spotted owls and that happily lived outside of the old growth habitat that the environmentalists sought to protect. So the marginal benefit of protection was zero. Second, and much more prominent, were the scare tactics. Protection of the spotted owl was going to kill the economy of the Pacific Northwest. The dominant story was that this would touch off an economic collapse similar to the Great Depression.

Ultimately, the environmentalists won in large part because they hired very smart economists who were able to convince the judge that economic collapse was not eminent. The judge basically lifted the testimony of the plaintiffs expert, my past and future employer Ed Whitelaw, in his decision stating, "The timber industry no longer drives the Pacific Northwest's economy. Job losses in the wood-products industry will continue regardless of whether the northern spotted owl is protected. The argument that the mightiest economy on Earth cannot afford to preserve old-growth forests for a short time, while it reaches an overdue decision on how to manage them, is not convincing today." And this was right. The economy didn't collapse. Indeed, Oregon and Washington were two of the only states in the country to not experience the recession of the early 1990s.

The point, I guess, is that there are lots of incentives to ignore a problem like global warming and there are lots of people who will try and make it easy for your to do this because they stand to gain alot from this. Try and ignore the spin, use your brain, and inform yourself, and if every independent, peer-reviewed paper says this is a problem, you should probably at least pay the issue a little attention (like, go see the movie). (And yes, I am shamelessly attempting to employ social pressure to incentivize you to get involved in solving this public goods dilemma).