Some thoughts on economists and climate and so forth
The other day in a somewhat tossed-off post I expressed unease at the influence mainstream economists have on climate policy, particularly within the Obama administration. Elsewhere on the green beat you’ve got people like Chu, who comes out of the science and technology worlds, or Browner, who’s been deeply involved in the mechanics of environmental policy implementation for decades — they are unusual both for their expertise and their ambition around climate and energy. Contrast that to the economic team, which is populated with conventional Rubinites, veterans of the Clinton administration. Their avatar is Larry Summers, who spent Clinton’s term pushing back against Browner on climate policy and who has popped up on green radars thus far mainly as the guy who had a hand in cutting back transit funding in the stimulus package. Geithner is basically cut from the same cloth.
It was with all that in mind that I found the notion of a Treasury Dept.-based climate policy team a less-than-thrilling prospect — my presumption, absent other evidence (and I made it very clear I was just noodling), is that it will be a Summers-esque force for go-slow incrementalism. I probably shouldn’t have used the term "mainstream economists," since that’s rather imprecise, but anyone who’s watched the Obama team take shape knows what I mean.
Anyway, this prompted some substance-free snark over on Common Tragedies, followed by more substance-free snark on Environmental Economics, followed by some substance-free mutual high-fiving in the comments. (This kind of cliquishness will surely help spread the proper respect for the social sciences.)
Still, Adam Stein — a guy who knows how to mix substance and snark in proper proportion — is concerned about what he sees as sporadic and inconsistent attacks on economists from environmental quarters. So this is as good an occasion as any to write a post on that subject I’ve been meaning to write forever. I want to try to get at a few things that bug me about
economists the way (some!) economists and economics (often!) tend to manifest themselves in public debates over climate change.
(Important caveats: Joe Romm is great, but I am not in some kind of cabal with him. He does not speak for me, or vice versa. Similarly, I do not speak for Grist. Similarly, I do not speak for Environmentalists. Just me.)
The first irksome thing is well-illustrated by a quote from economist Robert Stavins in Elizabeth Kolbert’s story on green jobs:
"Let’s say I want to have a dinner party. It’s important that I cook dinner, and I’d also like to take a shower before the guests arrive. You might think, Well, it would be really efficient for me to cook dinner in the shower. But it turns out that if I try that I’m not going to get very clean and it’s not going to be a very good dinner. And that is an illustration of the fact that it is not always best to try to address two challenges with what in the policy world we call a single-policy instrument."
This prompted Romm to go off on a somewhat over-the-top and over-broad rant, which in turn prompted substance-free snark at Common Tragedies and Environmental Economics, along with a great deal of mutual high-fiving in comments. (Sigh.) Tim Haab (who thinks I’m an idiot) says …
… the point is not that we shouldn’t try to meet both goals–good dinner and good shower–but rather, the policy of addressing both at once is STUPID. Determining the best way to make dinner in the shower will result in a bad shower and bad dinner (both outcomes will be suboptimal). There are better ways to reach both goals.
Targeting climate change under the mask of stimulus policy may result in suboptimal stimulus, and targeting stimulus under the mask of climate policy may result in suboptimal climate outcomes.
This is econo-thinking in action, with all the condescension and browbeating those outside the profession have come to know and love (all caps, even). "You will accept my Econ 101 principles or you’re STUPID!"
The ideal, apparently, is: You build a econometric model for climate policy, aiming for optimal outcome (defined as reduction in emissions). Adding multiple goals just complicates the model and leads to suboptimal outcomes. For each discrete goal, you want your distinct model and your distinct optimized outcome. Merging spreadsheets is STUPID.
But this is a completely absurd attitude to carry into the real world, for reasons that can be illustrated by tweaking the absurd analogy that started the whole thing. Say I want to get to the bus stop to catch my bus, and I want to eat breakfast. I could have a much better and more enjoyable breakfast if I sat at my table and took the time to cook eggs alongside my bagel. And I could get to the bus stop faster if I wasn’t trying to eat a bagel while I walked. But in the real world, I have multiple goals and limited time and resources. I’m friggin’ late. Eating a bagel while I walk isn’t the best breakfast or the fastest walk, but it gets both done when otherwise I’d have to sacrifice one or the other. The choice is very frequently suboptimal or nothing at all.
Similarly, in the world of politics there are multiple urgent priorities at any given moment. Attention from policymakers is highly limited. The time available to solve problems is limited. Public support is limited. Money is limited. It would be nice if we could sit back and optimize a policy to create as many jobs as possible, and optimize another policy to reduce emissions as much as possible, and optimize a third policy to reduce economic injustice. But we are not tenured academics, we are harried satisficers. If we can craft a policy that hits all three of those goals — even if any one of the goals could be more optimally achieved by some other pony policy — then we should count ourselves fracking lucky and jump on it.
Into that real-world situation wanders the economist, bad-mouthing our win-win policy in the press, advising policymakers against it because there’s a pony out there waiting. They don’t notice that we never catch the pony.
If economists want to make their assessments based on pure policy merit (as their models indicate it), abstracted from all grubby sociopolitical considerations, fine. They can point out the range of probable effects of various policies based on a range of assumptions. But they don’t just do that. They get involved in politics, weighing in on political questions and advising political decisionm
akers. They use their presumed authority, and allow it to be used, to recommend policies not in the abstract but in concrete political contexts. At that point they should no longer be able to hide behind their presumed expertise. When it comes to questions of politics, of competing values, an economist’s judgments carry no more weight than any other citizen’s.
Secondly … oh screw it. This post is way too long already. I was going to talk about how economists hide value judgments (e.g. discount rate) in their models but present the results as a kind of science, thus relegating anyone who disputes them to the status of fuzzy-headed hippie. Those value judgments ought to be the subject of public debate but too rarely are, allowing economists to basically smuggle their values into the public square under the guise of "expertise."
They also hide highly contestable or outright false assumptions in models. Like Nordhaus, who models climate change damage as a steadily rising linear function when the whole damn point is that we could flip over irreversibly into a discontinuous state at any moment, only nobody knows when, or at what level of atmospheric CO2.
Changing those assumptions, sometimes even slightly, can vastly change the model outcomes. (After all, Stern is just Nordhaus with a different discount rate.)
And then I was going to step back and take note of how economists generally have a horrible historical record of predicting the effects of environmental policies — and generally err on the side of overestimating the costs and underestimating the benefits. (Not to mention how most of them failed to see the greatest economic downturn of the last 50 years coming.) And how the profession never seems to be held accountable for those failures, despite the fact that every environmentalist has to carry Paul Erlich’s stupid fracking bet on their shoulders in perpetuity.
And then I was going to conclude on a conciliatory note, by saying that attacks on the whole discipline of economics are not useful (just like attacks on “environmentalists”). Those voices representing the discipline in the public square at any given moment are not necessarily a representative subset. Critiques generally ought to be more fine-grained, focused on particular schools of thought or analyses. I was going to talk about how there are tons of economists doing great work, challenging some of the assumptions conventional economists bring to bear on these issues. (Say, Daley and the ecological economists; Skip Laitner and the crew at ACEEE; the McKinsey folks.) And about how economists have tons to offer, and how communication between economists and greens ought to be far better than it is, and how I’ve learned a great deal from economists. Hell, I was going to hug somebody.
But then I realized that by this point I’m probably writing to an empty room, so I should just wrap it up.