Over the last few days, a storm has arisen over Steve Levitt and Stephen Dubner’s Superfreakonomics. The book hasn’t been released but the chapter on climate change has generated a ton of discussion. That chapter was posted (I suspect not with publisher’s approval) on the net and I have read it. It is entitled “What do Al Gore and Mount Pinatubo have in Common?” It is clearly part of the by-line for the whole book, “Global Cooling, Patriotic Prostitutes and Why Suicide Bombers Should Buy Life Insurance.” So it is clear the authors think this is a key chapter.
What is the controversy? Levitt and Dubner are accused of bias (to the point of denialism) and also stating incorrect scientific facts. Here is an identification of the latter. And then trying to work out what is going on is a mess. But, in reality, that is a couple of pages of the whole chapter. What of the rest of it?
This is one where each will have to read it themselves to decide. But on its face, in my opinion, there is nothing too wrong with it. Not enough for name calling. What the authors are doing is identifying the ‘economist’s angst’ in this whole discussion. They start off with the 1970s discussion of global cooling although it isn’t clear that is a strong prediction either. We are all frustrated that climate models aren’t perfect even if sufficient scientists think there is enough and so I read that discussion as providing an example of that. But then there is a pretty clear discussion of the intertemporal problem we face in dealing with this. Again, all fairly non-controversial if leaning to a sceptical side. Nothing to get upset about. Indeed, Levitt has a point that the entire chapter is mostly about what to do about global warming and so it is hardly a denialist exercise. They aren’t in the Michael Crichton camp. (Paul Krugman’s critique just doesn’t square up on reading the chapter).
What I think the chapter does well is express some hard-headed uncertainties about what we are trying to do on climate change management. I have expressed similar concerns on this blog and noted the attacks that come. Let’s face it, many environmentalists argue with a religious fervour. That might be fine for them but it isn’t for me. And moreover, just because climate scientists have demonstrated human generated warming does not mean that they are the final work on economic and political policy. The chapter really identifies such issues well. Australians should take note that when the book uses us as an example as to why unilateral greenhouse gas reduction would be a personally costly and fruitless idea.
The chapter then moves on to consider what to do about climate change. It too quickly moves through current plans for carbon prices saying they are uncertain and costly. Both true but there is surely more to it than that. After all, there is a ton of pollution going on and surely economists should be nervous about that being unchecked. Levitt and Dubner recognise externalities but then propose to mitigate externalities by eliminating the harm rather than changing behaviour. This is to be done through geoengineering which is discussed at length.
For starters, their claim that geoengineering is work exploring and even experimenting with is pretty persuasive. Why not try it? They argue that a form of repugnance is preventing that being taken seriously and note that environmental leaders will have to be convinced to turn that ship around. They write:
The real heavyweights in this fight are people like Al Gore.
And what does he think of geoengineering?
“In a word,” Gore says, “I think it’s nuts.”
And Levitt and Dubner ‘leave it there.’ You don’t leave it there. Please explain what Gore’s issue is. I still don’t know. They don’t explain and that exposes some underlying bias in the chapter.
But my issue is that they abandon economics at this point as they are mesmorised by the idea we can solve climate change cost effectively. The underlying argument as to why we should pursue this rather than behavioural change is not environmental religion but whether it is possible to put prices on this and get behavioural change. Levitt and Dubner don’t think it is possible. They argue that if you can’t get doctors to wash their hands to stop the spread of infection, how can you expect people to clean up the planet?
But come on. Isn’t the whole point of the Freakonomics project that prices work and behaviour changes in response to incentives? Everywhere else, a few pennies will cause massive consumption changes while when it comes to a carbon price, it is all too hard. My own view is that a carbon price plus some information might have some drastic effects on the behavioural side. This chapter should have been about what it takes to change behaviour and what we do and do not know about that. Instead, it passes through that entire issue in a completely unsatisfactory way. Where is the call for field experiments and randomised trials? Instead, we should stick hoses into the atmosphere and seemingly give up on trying to get people to turn off lights when they exit a room.
And there is another missing bit of economics. It is stated but again ‘left there’ but one concern about geoengineering is that it might be a license to pollute. No guilt or concern about future carbon prices holding anything back. Again, that is not explored but it is an issue capable of economic analysis and it is a gap here that they do not consider it. That is disappointing.
This is all a shame because the point of having a popular face for someone like Steve Levitt is to be able to push agendas they are convinced about. The geoengineering one is a candidate for that but the incompleteness of the economic job has undermined the exercise and may well damage the platform he has built. It would have only taken a few pages. Yes, it would be a little less punchy and counterintuitivey (is that a word?) but the influence factor would surely have been stronger.
When it comes down to it, pollution is occurring. As Ken Arrow pointed out long ago, if there are irreversibilities then there is an option value in curtailing the polluting activity so that we can work out what the right future path is. It is that risk that means we should not let externalities go unpriced. And even if geoengineering works out, there will still be externalities. The safe course is to deal with them now.
And as to whether you should buy Superfreakonomics. I trust Tim Harford’s review on this one and will likely buy the entire book.