Saturday, October 18, 2014

Climate: The Implication of Uncertainty

Anyone who looks seriously at climate issues should recognize that the consequences of climate change are very uncertain. My own view is that they are sufficiently uncertain to raise serious doubts about the sign as well as the size of the effect, that warming due to human production of greenhouse gases might well make us better off rather than worse off. Even if I am wrong and the effect is almost certainly negative, how negative it will be is very uncertain. CO2 emissions might fall sharply due to increases in the cost of fossil fuels or decreases in the cost of alternatives. For a given value of emissions, varying estimates of climate sensitivity imply at least a factor of two range for the resulting temperature. For a given increase in temperature, the effect on humans depends on what humans will be doing for the next century. Diking against a meter of sea level change could be a serious problem for Bangladesh if it happened tomorrow. If Bangladesh follows the pattern of China, where GDP per capita has increased twenty fold since Mao's death, by the time it happens they can pay the cost out of small change.

A possible response to this point is to argue that uncertainty is no argument against action. One simply replaces the uncertain range of outcomes with the best estimate one can provide of its expected value, the average of costs weighted by their probability, and acts as if that were the known consequence of warming. If the estimate of expected cost is ten trillion dollars, then any precaution to prevent it that costs less than ten trillion is worth taking.

It is a possible response and a popular one, but it is wrong for a reason that ought to be obvious to (at least) economists. The question we are answering is not "what should we do?" but "what should we do now?" Waiting may raise the cost of dealing with the problem but it will also provide additional information. The more information we have, the better our ability to decide what precautions are worth taking. Or not worth taking. Uncertainty that will be reduced over time is an argument against immediate action.

The usual rhetorical response is to claim that we barely have time to act at all, that if we wait more than a very short time it will be too late. This claim becomes less persuasive the more times it is made, and it has  been made, by various people, quite a large number of times over the past twenty years or so. It largely depends on picking some arbitrary temperature change, most commonly two degrees C, and treating it as if it were the end of the world. As salesmen commonly put it, "Buy Now—This Is Your Very Last Chance To Take Advantage of Our Special Offer."

For a more realistic opinion, consider an estimate of the cost of waiting by William Nordhaus, an economist who has specialized in climate issues. In the course of a piece arguing for immediate action against climate change, he reported his estimate of how much greater the cost of climate change would be if we waited fifty years to deal with it instead of taking the optimal action at once.  The number was $4.1 trillion. He took that as an argument for action, writing that "Wars have been started over smaller sums." 

As I pointed out in a post here responding to Nordhaus, the cost is spread over the entire world and a long period of time. Annualized, it comes to something under .1% of world GNP.
"Thought before action, if there is time."
(quote from a character in a Dick Francis novel)
And there usually is.

A Case of Posthumous Conscription

A recent Forbes article is headlined "What Would Milton Friedman Do About Climate Change? Tax Carbon." It reports on a forum at the University of Chicago at which several economists, including Michael Greenstone, described as the "Milton Friedman Professor of Economics at the University of Chicago," argued that Friedman would have supported a carbon tax. The evidence for that claim was a 1979 clip from the Phil Donahue show where Milton Friedman argued that if the government is going to do something about emissions, they should use an effluent tax rather than direct regulation. He does not actually say that government should do something about emissions, only that there is a case for doing so and, if it is done, the best way to do it is by a tax on emissions.

To get from there to the conclusion that he would have favored a carbon tax requires at least one further step, a reason to think that he would have believed that global warming due to CO2 emissions produced net negative externalities large enough to justify doing something about them. The problem with that claim is that warming can be expected to produce both negative externalities such as sea level rise and hotter summers and positive ones such as longer growing seasons and milder winters. The effects will be spread out over a long and uncertain future, making their size difficult to estimate. My own conclusion, defended in past posts here (one example), is that the uncertainties are large enough so that one cannot sign the sum, cannot say whether the net effect will be positive or negative.

I do not know if my father would have agreed but I have at least a little evidence on the subject, more than offered in the Forbes article. The same issue arose in the earlier controversy over population. Just as it is now routinely assumed that warming is bad, it was then routinely assumed that population increase was bad. Forty years ago I wrote a piece on the subject for the Population Council in which I attempted to estimate the  externalities associated with population. I concluded that they were too uncertain for me to tell whether the net effect was good or bad. My father read the piece and commented on it. If he had disagreed he would have said so, and he did not. It is possible that he would have felt differently in the case of climate change, but I can see no reason to expect it.

The article quotes professor Greenstone on the uncertainty:
Estimating the cost is tricky, Greenstone said, but scientists and economists have models for projecting the cost of each added ton of carbon on agricultural losses, mortality, sea-level rise, storm surge, and other climate effects.

It’s a complicated task but I think the best evidence suggests that it’s probably around $40 a ton,” he said. The U.S. government has projected the cost of carbon emissions at $37 per ton.
Current estimates of climate sensitivity, the effect on temperature of an increase in CO2, vary by more than a factor of two. One would expect the size of the externality due to an additional ton of CO2 to increase with the temperature increase. A further uncertainty, reflected in the various scenarios of the IPCC report, is the amount of CO2 that will be emitted over the next century. Lockheed Martin has recently claimed that it will have a working fusion reactor in the near future. I have my doubts that it is true, but if it is, the result should be to reduce CO2 emissions over the course of the next few decades to between half and a quarter of what they would otherwise be. That would sharply reduce warming and thus the cost of additional CO2.

One would expect similar effects from any substantial reduction in the cost of other alternatives to fossil fuels, such as nuclear or solar power, or from a substantial increase in the cost of fossil fuels due to the exhaustion of the more readily accessible sources. Additional uncertainties are associated with the relevant climate science. The IPCC, for example, claimed in its fourth report that warming increased drought, retracted that claim in the fifth report.

Whether or not my view that we cannot sign the externality is correct, I would be very surprised if Professor Greenstone could justify his confidence in the specific number he offered—which happens to be close to the official government estimate. I would be equally surprised if he could offer evidence that Milton Friedman would have taken seriously a government estimate of an uncertain number offered in support of a policy the current administration favored.

Before they died, my parents created a foundation to promote the idea of school choice. One of the terms on which they created it was that the foundation was to end a fixed number of years after the last of the founders died. The reason for that was my father's concern, possibly based on the examples of the Ford and Rockefeller Foundations, that once the founders were no longer around their names would be used in support of policies they themselves would not have supported.

Of all my father's accomplishments, I believe the one he was proudest of was his role in ending military conscription. I do not think he would be happy to be conscripted, posthumously, for someone else's cause.

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Is There Political Correctness on the Right?

I can think of at least three occasions in recent years when someone prominent made a statement inconsistent with left wing orthodoxy, was fiercely attacked for it, and forced in one sense or another to back down. In each case the statement was, as best I can tell, a defensible one. One involved a Nobel Prize winning scientist, one the president of a top university, the most recent a best selling author.

Are there any similar cases involving right wing political correctness? The question isn't whether there are any beliefs that are orthodoxy on the right—surely there are. It is whether there are cases of someone prominent making a defensible statement that violates such an orthodoxy and being attacked for it so fiercely that he was forced to publicly retract it, resign from a prominent position, or both. I'm not counting cases of conservative politicians backing down from statements that offended their supporters, since that's a different pattern and one that occurs across the political spectrum.

Friday, October 17, 2014

Red Tribe, Blue Tribe

I've just been reading an interesting and persuasive post about the way in which people's beliefs and attitudes tie into their ideology. Each side has a view of the world covering a variety of issues. When something happens that makes a good fit with one side's view, that side pays a lot of attention to it, the other side does its best to pretend it never happened. When something more ambiguous happens, each side tries to interpret it in a way that fits their narrative. The result is that someone's attitudes on issues ranging from global warming to Ebola can, to a considerable extent, be predicted by whether he self-identifies as conservative or liberal. It's more or less the same point I discussed in an earlier post on Dan Kahan's studies of why people believe things, generalized and spiced up. 

Some of my favorite bits:
The Red Tribe and Blue Tribe have different narratives, which they use to tie together everything that happens into reasons why their tribe is good and the other tribe is bad.
And, after giving an imaginative account of how global warming should have been presented if the objective was to play into the conservative narrative instead of the liberal:
If this were the narrative conservatives were seeing on TV and in the papers, I think we’d have action on the climate pretty quickly. I mean, that action might be nuking China. But it would be action.
 And finally:
I blame the media, I really do. Remember, from within a system no one necessarily has an incentive to do what the system as a whole is supposed to do. Daily Kos or someone has a little label saying “supports liberal ideas”, but actually their incentive is to make liberals want to click on their pages and ads. If the quickest way to do that is by writing story after satisfying story of how dumb Republicans are, and what wonderful taste they have for being members of the Blue Tribe instead of evil mutants, then they’ll do that even if the effect on the entire system is to make Republicans hate them and by extension everything they stand for.
Which demonstrates that the author understands the logic of situations where individual rationality fails to produce group rationality.

Wednesday, October 15, 2014

Assuming Your Conclusion

Health officials have said there was a breach in protocol that led to the infections, but they don't know where the breakdown occurred.

Officials have said they also don't know how the first health worker, a nurse, became infected.
 Both quotes are from the same article.

I was struck earlier by headlines asserting that a breech of the protocol, the rules for preventing contagion, had occurred. The basis for that claim was and is the fact that a nurse got Ebola, not any evidence of how it happened. The obvious alternative is that the existing protocols are in one way or another inadequate, possibly because the beliefs about the disease on which they are based are in part mistaken. It is only if you assume that the protocol is correct that you can conclude it was not followed.

Tuesday, October 07, 2014

Weather is not Climate

An observation popular with one side of the climate controversy when the weather is unusually hot, with the other side when it is unusually cold.

Thursday, October 02, 2014

My Record as a Prophet

A claim I usually deny. But consider:

1973: My chapter on Uber

1973: My chapter on China's transition to capitalism

1973:  My chapter on SpaceX and Virgin Galactic

1989: My chapter on our interventions in Iraq, Libya and Afghanistan

(Link goes to the relevant part of the chapter).