Monday, May 22, 2006

Differences in Beliefs -- The Environment Edition

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).

I saw Al Gore at the "global climate change" debate in Sanders last year, and it was really interesting. I thought one question was especially noteworthy. One student asked why the debate would be about "global climate change"--a term created by industry reports as a euphemism for "global warming." That's a prime example of the industry trying to convince us that there are low benefits to us addressing this "theory."

On the other hand, while environmentalists could go the route of the spotted owl debate and hire economists to argue that changing global emissions rates will incur low costs on us, I think what environmentalists are also doing is to monger fear to convince us that there are high benefits to addressing the issue. For example, after I watched "A Day After Tomorrow," I am irrationally scared during thunderstorms and heavy snowfall. Yesterday, the winds picked up and I heard thunder, and I literally ran into Quincy. Good thing I did too, because it started pouring, but I definitely wouldn't have died (which is what I was afraid of)
I really need to study for my ec1010b exam... thank you Bryce for giving me something else to do...
The trailer for the movie looks incredible. As for the issue at hand, I'm not sure how to get people to realize how pressing global warming really is. It's not your typical public goods problem because most people perceive the cost as being very distant in the future. As such, the present discounted cost seems rather low. I'm somewhat afraid that if people don't begin to comprehend how bad and how soon problems may arise, we are in for some serious disaster.
Yeah I definitely agree with Andy, and that when the pulic good problem coupled with the fact that the costs are in the future, and that the benefits are in the future also, there is really no incentive to do anything. However, as we get closer and closer to real problems, people will probably start campaigning more furiously for poicy change. This is probably what we are seeing right now.
yea if everyone were as scared as we are, i think people would be lobbying harder. we need someone to actually die from global warming. we need it to be the primary cause of death, just there people were able to establish a clear connection between smoking and death.
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