## Saturday, November 20, 2010

### America is in good hands...

The Colbert ReportMon - Thurs 11:30pm / 10:30c
Chair Apparent
www.colbertnation.com
 Colbert Report Full Episodes 2010 Election March to Keep Fear Alive
[HT: Aguanomics and Env-Econ]

I'd like to to echo the sentiments expressed in the above blogs: Oh. My. God.

PS - Reminds me of a comment I left elsewhere
Yup, the Tobacco Institute-esque funding of Climate Change denial is a huge problem in trying to clear all the misinformation out there. (I almost feel sorry for sincere sceptics, because it's increasingly hard to separate the BS from legitimate concerns. Although, perhaps that says something in of itself...)
Still, with some people, 'evidence' will never be enough:
“Climate change is real, and man is causing it,” Mr. Hill said, echoing most climate scientists. “That is indisputable. And we have to do something about it.”
A rain of boos showered Mr. Hill, including a hearty growl from Norman Dennison, a 50-year-old electrician and founder of the Corydon Tea Party.
“It’s a flat-out lie,” Mr. Dennison said in an interview after the debate, adding that he had based his view on the preaching of Rush Limbaugh and the teaching of Scripture. “I read my Bible,” Mr. Dennison said. “He made this earth for us to utilize.”
http://www.nytimes.com/2010/10/21/us/politics/21climate.html?_r=1
Take *that* science!

## Thursday, November 18, 2010

### Experts, democracy and public opinion

Consider this a follow-up, of sorts, to my Facts vs Beliefs post...

Going over what I had written there and then partaking in the comments section, I was reminded of a review of Mark Levin's best-selling book, Liberty and Tyranny, by Jim Manzi[*]. It's a great piece of literary criticism in which Manzi - focusing specifically on the the issue of climate change - doesn't pull in punches about Levin's intellectual laziness. I really urge everyone to read the entire article, but here is a sample:
Liberty and Tyranny and Epistemic Closure
[W]hen I waded into the first couple of chapters, I found that – while I had a lot of sympathy for many of its basic points – it seemed to all but ignore the most obvious counter-arguments that could be raised to any of its assertions. This sounds to me like a pretty good plain English meaning of epistemic closure. The problem with this, of course, is that unwillingness to confront the strongest evidence or arguments contrary to our own beliefs normally means we fail to learn quickly, and therefore persist in correctable error.
I’m not expert on many topics the book addresses, so I flipped to its treatment of a subject that I’ve spent some time studying – global warming – in order to see how it treated a controversy for which I’m at least familiar with the various viewpoints and some of the technical detail.
It was awful. It was so bad that it was like the proverbial clock that chimes 13 times – not only is it obviously wrong, but it is so wrong that it leads you to question every other piece of information it has ever provided.
Levin argues that human-caused global warming is nothing to worry about, and merely an excuse for the Enviro-Statist (capitalization in the original) to seize more power. It reads like a bunch of pasted-together quotes and stories based on some quick Google searches by somebody who knows very little about the topic, and can’t be bothered to learn.
After mentioning the fact the Levin fails to mention a single one of the host of scientific organisations that have endorsed the notion of man-made global warming, Manzi goes on to list a good number of them. He then writes:
Of course, this roll call [of scientific bodies] could be arbitrarily long and illustrious, and that does not make them right. Groupthink or corruption is always possible, and maybe the entire global scientific establishment is wrong. Does he think that these various scientists are somehow unaware that Newsweek had an article on global cooling in the 1970s? Or are they aware of the evidence in his book, but are too trapped by their assumptions to be able to incorporate this data rationally? Or does he believe that the whole thing is a con in which thousands of scientists have colluded across decades and continents to fool such gullible naifs as the U.S. Congressional Budget Office, numerous White House science advisors, Margaret Thatcher and so on? Are the Queen of England and the Trilateral Commission in on it too?
But what evidence does Levin present for any of this amazing incompetence or conspiracy beyond that already cited? None. He simply moves on to criticisms of proposed solutions. This is wingnuttery.
===

By chance, I then scrolled through some of Manzi's more recent posts and came across one that is directly relevant to the topics that Becks, Mars and I have been discussing in the comments section of the Facts vs Beliefs post. Essentially, Manzi is grappling with the question of how we should proceed when public opinion conflicts with that of the relevant experts. He cites some interesting articles that offer food for thought on a number of opposing views. Again, I urge you to read the full article, but here is a snippet:
Our So-called Experts
This isn’t a very popular statement, but there is a role for elites in public life. Just like I want knowledgeable CEOs running companies and knowledgeable doctors performing surgeries, I want knowledgeable legislators crafting public policy. That’s why we have a representative democracy, rather than some form of government-by-referendum. But of late, the elites in the Republican Party are abdicating their roles, preferring to pander to the desire for free tax cuts and the hostility to Al Gore than make tough and potentially unpopular decisions to safeguard our future.
[snip]
I think this raises the crucial question in this debate: What is the valid scope of expertise?
In the case of climate change, there is actual scientific knowledge about the properties of CO2, but advocates of emissions mitigation schemes constantly attempt to drape the mantle of science, or more broadly expert knowledge, around public policy positions that, as I have argued many times, do not follow even from the core technical reports produced by the asserted experts.
[snip]
The essential Progressive belief that Klein expresses in undiluted form is that crafting public policy through legislation is a topic for which, in simplified terms, the benefits of expertise outweigh the benefits of popular contention. Stated more cautiously, this would be the belief that the institutional rules of the game should be more heavily tilted toward expert opinion on many important topics than they are in the U.S. today.
This would be a lot more compelling if the elites didn’t have such a terrible track record of producing social interventions that work.
While social interventions certainly don't always work, this of course does not mean we should abdicate our responsibility in thinking seriously about how we might solve the problem at hand. Further, the crucial point with "relevant expertise" in the context of this discussion, is the juncture where we move from science to the spheres of policy and economics. As I've pointed out a number of times before on this blog, these need to be separated. I want scientists to tell what they expect the likely impacts of climate change to be, but they shouldn't be the ones to decide how (or if) we react. Speaking of which...

I deplore misinformation and alarmism on both sides of this argument. I can think of a number of people - Manzi among them - who believe that man-made global warming is occurring, but provide reasonable arguments as to why it makes more (economic) sense to focus on, say, adaptation rather than mitigation measures. For various reasons - uncertainty, the imperfect substitutability of of natural and man-made goods, etc - I respectively disagree with these assertions.

Nevertheless, whatever your stance, the fundamental problem remains that carbon does not carry a price to correct for the negative externality that it entails... People are simply not able to make an economic valuation of how best to respond to climate change if they are missing the cost component. There are many good reasons to oppose regulations and micromanagement of our lives by the state. However, I have yet to hear a single convincing argument of how society would resolve the climate issue without significant government intervention. That, unfortunately, is the very problem at the heart of public goods.

[*] For those of you that haven't heard of Manzi before, I don't think he would object to me summarising his political position as somewhere between a modern-day conservative and libertarian (though closer to the latter). He has provided reasoned criticisms of reactionary emissions-reductions policy while writing for the Cato Institute among others, yet remains strongly critical of those opposing the mainstream scientific view on (i.e. anthropogenic) climate change. He currently contributes regular opinion pieces for The American Scene.

## Sunday, November 14, 2010

### Facts vs Beliefs

I should really be studying... but my attention has been drawn to several articles and interviews over the last few weeks that coincide with a recurring theme here at Stickman's Corral: The tendency of beliefs to trump facts, and a priori biases to cloud objective decision-making.

For instance, the below radio interview discusses new research on the problem of "backfire". As the name suggests, this is the phenomenon whereby facts don't necessarily have the power to change people's minds... Indeed, quite the opposite, as people actually tend to cling to their beliefs more strongly when presented with opposing evidence!

A related article on the same research can be found here:
The general idea is that it’s absolutely threatening to admit you’re wrong,” says political scientist Brendan Nyhan, the lead researcher on the Michigan study. The phenomenon — known as “backfire” — is “a natural defense mechanism to avoid that cognitive dissonance.
holds that people make rational decisions by assessing facts. All that has to be done to persuade people is to lay out the data: they will then use it to decide which options best support their interests and desires.
A host of psychological experiments demonstrates that it doesn’t work like this. Instead of performing a rational cost-benefit analysis, we accept information which confirms our identity and values, and reject information that conflicts with them. We mould our thinking around our social identity, protecting it from serious challenge. Confronting people with inconvenient facts is likely only to harden their resistance to change. [HT: WTD]
Regular readers will know that I've been trying to make a similar point on this blog for a while (e.g. herehere and here).  Stickman's Corral tries to abide by the relaxed principles of El Duderino and this approach was motivated by the realisation that: a) Making purely unequivocal statements is a one-way ticket to intellectual stagnation, and b) The fear of embarrassment or being wrong is among the most powerful motivators out there. If you don't offer people a way out that preserves their sense of dignity, you don't really offer them anything all. I'm always taken aback by how many people don't seem to grasp this simple rule of human behaviour. Or, as I've said several times now: Calling someone an "idiot" is not the best way to convince them of your position.

Now, of course, being respectful of someone you disagree with is hardly the same as not having an opinion. I take numerous angles on this blog that I feel are pretty clearly laid out. Further, I abhor false equivalences. Being open to changing your mind is of fundamental importance, but there are many issues where I think the evidence is simply too compelling for any reasonable person not to embrace a particular side. On this topic, it really grates me to see how tautological the defensive arguments against, say, evolution and climate change are. The first of these is well documented, but the latter typically goes something like this:

Knee-jerk Sceptic: There is no scientific consensus about humans causing climate change.
Response: Well, actually every major survey shows that over 95% of practising climate researchers support this mainstream view...
Knee-jerk Sceptic: Those studies are flawed. [Or: Those mainstream scientists are wrong and the minority who disagree and are correct and have simply been marginalised.]
Response: Come on, that's a real stretch. The dissenting research simply doesn't hold up to scientific evidence and peer-reviewed scrutiny...
Knee-jerk Sceptic: The peer review process has been corrupted. We can't trust it any more as opposing views have been silenced. Just look at the "Climategate" emails.
Response: Well, actually, the whole thing was blown ridiculously out of proportion and three independent reviews have cleared the involved parties of any significant scientific malpractice.
Knee-jerk Sceptic: The reviews were just a sham and a cover up.
Response: Seriously? Okay, how about the fact that independent media analyses have come to a similar conclusion and even sceptics have offered compelling reasons not to put stock into the conspiracy theories...
Knee-jerk Sceptic: I don't care about those reviews; they aren't official. And there is a conspiracy: The governments of the world want to institute a new communist world order by imposing a huge carbon tax so to regulate the free peoples of the world.
Response: That is ridiculous. The amount of money spent on fighting climate change pales in comparison to money spent on, say, oil exploration and research. Even if it didn't, why do you suppose governments would sabotage their own economies by potentially depriving themselves of "cheaper" fuel? Think about it: They can't even agree to binding emissions targets!
Knee-jerk Sceptic: Governments are just fighting it out to see who gets greatest share of the pie.
Response: Look, scientists working separately all over the world have arrived at the same basic hypothesis that CO2 is the most likely culprit behind the observed warming of the last 150 years. Yes, there is uncertainty, but that should call for more caution if anything. More to the point, putting a price on carbon is ultimately about saving us money, since it corrects  for the negative costs that climate change is likely to entail.
Knee-jerk Sceptic: Scientists/Economists are part of the global conspiracy.

Etcetera, etcetera...
Sealed argument, much?

THOUGHT FOR THE DAY: Facts are important, but you have to play - and be sensitive - to peoples' emotions and values if you really want to win hearts and minds.

## Friday, November 12, 2010

### Exams beginneth...

So posting is going to take a back seat for the next week or three.

Well, not that I've been particularly prodigious in terms of output so far anyway... But just getting the word out there in case.

o-[-<

## Tuesday, November 9, 2010

### Daylight savings, cigarette bans and the freedom to choose

Over on the aguanomics blog, David Zetland has a post arguing that the concept of Daylight Savings Time (DST) is "rubbish". He says that it does not contribute towards energy savings and simply inconveniences people.

I'm pretty sceptical of the 'benefits' of DST myself, but felt compelled to comment on his assertion that "it wold be better (more flexible) for businesses to adjust work hours, instead of facing a command and control 'fix'". In essence, my point is that individual businesses are unlikely to adjust their own work hours, or have much freedom (i.e. scope) to do so in reality. Firms need to operate during "conventional" office hours because this is when everyone else is doing business. It just isn't profitable to break rank when it comes to this kind of thing. Deciding to open shop an hour later would be counterproductive in terms of profitability and competitiveness; you've essentially cut yourself off from the bulk of the marketplace for that entire period.

In these situations - where we're faced with norms that have become institutionalised - it's very difficult to establish the level of coordination that makes it profitable for a firm to change its work hours without some intervening force guaranteeing that everyone does the same. Or, at least some critical mass of firms that corresponds to a tipping point. Thus, if daylight savings does confer benefits (again, I'm certainly not convinced), the institutional inertia associated with the established system makes the market inflexible to adapt. In short, my behaviour is too dependent on the behaviour of others and the norms in society. This is closely linked to what Thomas Schelling described in discussing the problems of "micromotives and macrobehaviour"...

To give some brief anecdotal evidence, I mentioned the fact that, having worked in countries without DST, I can't really recall any companies changing hours of their own volition. (Flexible work hours -- e.g. the option to arrive between 9am and 9:30am -- don't count because firms arrange for overlapping cover. Someone has to be at the office at 9am and again until 5pm.)

Anyway, this got me on to the issue of cigarette bans and smoking laws, which I do consider a legitimate problem. I've been chewing on this for a little, since I sympathise with free market arguments over the primacy of private property and market incentives to create "smoke-free" clubs and restaurants if there is a need. Further, if non-smokers freely choose to frequent such places, exactly what externality does Government correct when it passes smoking legislation? However, while there's a seductive logic to these sort of arguments, things just don't seem to work like this in reality... Again, I can draw on my personal experiences.

Having spent most of my childhood in South Africa, I remember restaurants installing separate smoking sections only once they had been required to do so by law. Despite this convention having been in place for over a decade now, bars and nightclubs -- which do not fall under the same law -- have yet to follow suit. So it's not like the market hasn't had time to react. In my home city of Cape Town (and the rest of the country for that matter), I really can't recall a single bar or nightclub that has established smoke-free zones of their own accord. I've asked several friends and family members just to be sure and they can't name any either. It's the same for other areas of the world that I've visited where no smoking bans exist.

Public health issues of cigarette smoke aside, I think that this again boils down a matter of institutional inertia and a coordination problem that is limited by competitive behaviour. Nightclubs and bars may want to switch over to smoke-free environments, but would be nervous to lose clientèle. Further, the problem with these places of social gathering is that they represent, in effect, areas that we like to enjoy in common. I don't wish to exclude my smoking friends from the places that I frequent, and vice versa. (I think that this issue of "commons" is another reason to be sceptical of the "freedom to choose" argument in this particular instance.) Unfortunately, since there are inevitably some people already smoking in the club, there's little point in "polite" -- for want of a better word -- smokers going outside for a drag. Lastly, I'd suggest that it's not a matter of smoking being "socially unacceptable", but rather that these institutions have become so entrenched that we can't assume businesses will change their own rules, at least not on any significant scale.

THOUGHT FOR THE DAY: We should always question whether Government interventions really make us better off as a society. The rule of thumb is that we want less micromanagement and more freedom to choose for ourselves. However, market outcomes don't always play out as well as we'd like to think they will. As always, the proof of the pudding is in the eating.

UPDATE: Karl Smith agrees.

## Monday, November 8, 2010

### Solar thermal and water use in California

Having discussed some similar implications for the grandiose solar plans in South Africa, here's a snippet from an interview with Bright Source Energy CEO, John Woolard. Talking to Yale Environment 360, he discusses the company's experiences from building solar-thermal plants in California's parched Mojave Desert:
e360: BrightSource’s Ivanpah project is not only the first large-scale solar thermal project to break ground, it is the first to deploy a new power tower technology. Why is that significant?
Woolard: [snip] The big [problem] is water. What is the world going to look like over the next 20, 30, 40 years? Water in the desert is going to become a much more challenging proposition. So we’ve gotten water usage down to a minimum — the lowest of anybody in the world, basically.
[snip]
e360: It seems that one thing BrightSource did that avoided a lot of controversy was the water issue. You chose to use “dry” cooling, which uses substantially less water than “wet” cooling.
Woolard: Best decision we ever made as a company. We were the only one that did it early. The fact that we’re doing it has forced others to do it. If you use 2,000 or 3,000 acre-feet of water [the equivalent of nearly 1 billion gallons] in the desert on an annual basis, that’s obscene.
We’re providing power for 150,000 homes, and we’re using water for 300 homes. That’s as water-efficient as anything you can do. Fossil plants still use wet cooling and everybody ought to know that. That needs to change. It ought to be a level playing field. It shouldn’t just be renewables that do this. Energy and water are so inextricably linked.

## Friday, November 5, 2010

### Fancy a cruise?

This gets better and better...

It's like watching a tennis match with humans and chairs.

I enjoy how your man at the front desk is acting all chilled until he gets sucked in as well. Also, see if you can spot big stripey guy from 0:20 make a swift cameo again at the one minute mark.

### Physics Envy (again)

Seeing as I've covered the topic a few times already, here is an interesting - and surprisingly amusing - presentation by Andrew Lo of MIT, based on a paper he has co-authored with (physicist) Mark T. Mueller: "WARNING: Physics Envy May be Hazardous To Your Wealth!"

Lo's discussion is somewhat contextualised towards financial economics and markets, but he certainly builds his case by first discussing economics in general:

(HT: Bill Easterly. The actual presentation begins around the 03:10 mark)

As I see it, Lo and Mueller's general propositions dovetail nicely with the arguments that I (and many others for that matter) have put forward in the past. For instance (+/-07:05), focusing on when to use your tools rather than simply throwing them to one side:
So what we thought we would do in this paper is to try to trace the origins of physics envy and then see whether or not it really is the cause of crisis, or when it is and when it isn't, and how we might deal with it in a somewhat more productive manner than simply saying that quant is broken and we should forget all about all of this fancy mathematics.
Because, frankly, when I first came across this very popular sentiment that quant is at the root of financial evils, I have to say that it struck me a little bit odd. It's a bit like blaming arithmetic and the real number system for accounting fraud. It's true that they're involved, but you're sort of missing a piece!
Among the many interesting points Lo makes, it's also intriguing to see how reverent he is to the supposed father of physics envy, Paul Samuelson. For example, at (+/-) 12:45 he defends Samuelson against a charge of blind physics envy by quoting a passage from the latter's famous dissertation:
[O]nly the smallest fraction of economic writings, theoretical and applied, has been concerned with the derivation of operationally meaningful theorems. In part at least this has been the result of the bad methodological preconceptions that economic laws deduced from a priori assumptions possessed rigor and validity independently of any empirical human behavior. But only a very few economists have gone so far as this. The majority would have been glad to enunciate meaningful theorems if any had occurred to them. In fact, the literature abounds with false generalization. (Samuelson, 1947, p. 3)
[Editors note: Samuelson goes on to add (p. 4): "By a meaningful theorem I simply mean a hypothesis about empirical data which could conceivably be refuted, if only under ideal conditions." Karl Popper anyone? I would also note that Lo makes repeated reference to the need for empirical testing as a means of validating economic theory, at the same time as he is wide-eyed about the problems we may encounter in doing so.]

## Tuesday, November 2, 2010

### Carbon Price vs Technology (R&D) Initiatives

This coming in a few days late, but Rob Stavins continues with his series of excellent posts on environmental economics and policy instruments. In his most recent column, he discusses the need for substantive climate policy to go beyond the view that we should either establish a carbon price or pump money into technology R&D. Instead of being seen as substitutes, these two policy alternatives should be viewed as compliments to achieve meaningful emissions reductions...

Both are necessary but neither is sufficient:
For many years, there has been a great deal of discussion about carbon-pricing – whether carbon taxes or cap-and-trade – as an essential part of a meaningful national climate policy. It has long been recognized that although carbon-pricing will be necessary, it will not be sufficient. Economists and other policy analysts have noted that policies intended to foster climate-friendly technology research and development (R&D) will also be necessary, but likewise will not be sufficient on their own.
Stavins then lists some of the key elements that make a carbon price and technology polices, respectively, important.

For the former, his basic argument is that a carbon price (i.e. carbon tax or cap-and-trade) internalises the negative externalities of CO2 at the least cost to society; something widely agreed on by economists. It does this by establishing a level playing field that allows for decentralised decision-making by firms on how best to reduce their own emissions, while also overcoming problems of pollution heterogeneity. (In economics jargon, a carbon tax or cap-and-trade can ensure that marginal costs of abatement are equalised across producers... Which basically just means that we cut our pollution as efficiently as possible.)

However, while a carbon price is the most cost-effective means of reducing CO2 emissions, it falters in other areas... most importantly "R&D market failure". This essentially refers to the fact that firms are unwilling to make the necessary (i.e. efficient) levels of investment in R&D, because they won't capture the spillover effects that accrue to other firms from pioneering new technology. To bring it back to economic jargon, this time we are faced with a positive externality that is not sufficiently exploited. Or, as one of the top executives at Statoil put it when referring specifically to Carbon Capture and Storage (CCS): "There is a first-mover disadvantage, as the one who builds (later) will not make the same mistakes and learn from others."

In other words, we probably need active technology polices that aim to foster innovation and R&D directly. Stavins doesn't readily name many examples in his post, but they include things like targeted investment support and government research, as well as feed-in schemes for alternative energy sources. These issues all fall within the category of innovation economics, which is a very interesting field. (Unfortunately, the wiki entry on innovation economics that I've linked to here is pretty poor in my opinion. Nothing on lock-in and path dependencylearning effects and learning-by-doing, spillovers and network effects,...)

Before wrapping this post up, I'll say that focusing on direct technology support and investment has become increasingly popular recently. To name one prominent example, controversial environmental commentator Bjørn Lomborg raised more than a few eyebrows when he called for the establishment of a $100bn climate fund in late August... to be funded by a$250bn carbon tax, no less. (No matter how some sceptics were trying to frame it, this was certainly a stark departure from his previous position that climate change did not seem to warrant dramatic mitigating action, as this wouldn't yield a profitable return on investment.)

THOUGHT FOR THE DAY: Sometimes two weapons are better than one. Just ask He-Man...

 Gun? Check! Sword? Check!