As it happens, I recently wrote a term-paper on this exact issue for my philosophy of science class. I've decided to make it available here for those who are interested in this debate!
To summarise, I don't see anything inherently wrong with scientists engaging in political advocacy, as long as they are explicit in their intentions... and the scope of their expertise. (E.g. I often see physical scientists make strong pronouncements about economic matters and that makes me uncomfortable.) One climate scientist whom I feel always struck a good balance on these issues and quote in my term-paper is the late Stephen Schneider. To channel Schneider: Our response to climate change must be underpinned by scientific facts, but it should ultimately also be reflective of society's value judgements -- including those of our scientists.
Some brief points/caveats:
- This was a “pass/fail” essay, aimed at gaining admission to sit the exam, and I hope that you’ll evaluate the material accordingly. That said, the emphasis on citations and quotations probably means that it provides a good overview of the issues.
- Apart from scientists working on the physical basis for climate change, I also tried to pay special attention to the role of economists. The Stern Review, which many people regard as the archetypal blend of economics and advocacy, therefore comes in for special attention.
Click to read the term-paper.
Hi Grant,
ReplyDeletethanks for sharing the term paper. You've certainly thought and read more about the issues at stake than me, so what follows might be unwarranted. Still, a few thoughts:
I thought you played the criticism of Stern's discounting a bit down. First, the original Review did not include a sensitivity analysis for the discount rate. E.g. it was not, at all, clear that the order of magnitude of difference between his and e.g. Nordhaus' SCC estimates stemmed from valuation, not (or not only) more severe impact scenarios. Stern was not open about this, and this was a severe shortcoming of a work of this scale.
Second, the criticism was not limited to an alleged methodological shortcoming (that is, that Stern didn't derive the discount rate from return on investment or such). Several commenters (Dasgupta, Weitzman) have pointed out that they have no problem with the 0.1 percent pure rate of time preference based on ethical considerations (in fact, both have argued in favor of such a choice, at least for the long term), but that it was incompatible with the elasticity of marginal utility of consumption of unity. I.e. the criticism was that Stern was simply sloppy with his reasoning and failed to justify (also on ethical grounds!) this combination so out of common practice. You somehow skirt this: though you note his PRTP and his discount rate independently, you do not mention how Stern got from the one to the other - though this was exactly the focus of the criticism! Also note that Nordhaus' review of the Review also contains a discussion of the ethical framework, nothing that Stern's reasoning for the 0.1 percent PRTP was sloppy, as he ignored every single ethical consideration but that that gave him the number he wanted. So, the ethics-based methodology was noticed and criticised by virtually every commenter of the Review, and regardless of how strong/weak these criticisms are, I don't think they can be appreciated by the "inter alia" interjection as you do it.
I agree that Weitzman's "dismal" assessment is more convincing than Stern's. Though I'd also note that Weitzman contains no policy whatsoever. That his assessment suggests something like a "catastrophy insurance" approach seems legit. But as he himself acknowledges, it is not clear what this means. This does not necesarilly save CBA based IAMs: if they are invalidated, they are invalidated, period. But this makes the situation all the more difficult, as Weitzman tells us just that - not what policy response would be adequate (though note that Tol published an evaluation using the minimax principle as an attempt to fill this void).
P.S.: a minor point. You mention Stern's standing as an economist. I don't want to doubt this standing - but why is it that this has been mentioned ever since the release of the Review, while it is never mentioned that virtually all of his critics are ranked consistently higher than him (e.g. at repec)? Not that I'd think this is extremely important, but as you, too, mention it, where does this slightly authoritative "Stern is an important economist" come from?
Martin, thanks very much for your perceptive and considered comment.
DeleteOn the suggestion that I played down the criticism of Stern's discount rate... My short response is: Yes, I agree. The issue is many times for complicated than I have alluded to in the above essay. However, I intentionally decided on a somewhat superficial discussion so as to keep the overall narrative of the paper as streamlined as possible. (You may even be interested to know that I submitted "ethical considerations of the discount rate" as an alternative term-paper topic, but my prof. indicated his preference for the advocacy issue.)
Similarly, I agree that there are other criticisms to make about the Stern Review (as well rebuttals). Again, however, I mostly tried to maintain the narrow focus of the paper by not delving too deeply into these. E.g. FN #9: "Of course, legitimacy does not necessarily imply correctness. For what it’s worth, I think that Stern’s critics have made a number of valid arguments against him[...]"
That said, I also think that Stern and his affiliates have provided some compelling rebuttals to at least some of the criticisms directed at the report. Nonetheless, your point that
regardless of how strong/weak these criticisms are, I don't think they can be appreciated by the "inter alia" interjection as you do it.
is well taken.
I am less in agreement about your comment about Weitzman. His initial paper was purely theoretical, but it had obvious policy ramifications and has significantly altered the economic debate around climate change. As you say, IAMers have attempted to incorporate Weitzman's basic insights into their models... even if these are imperfect replications. (Although, I should also say that some IAMs -- such as the PAGE model developed by Chris Hope -- have tried to incorporate some form of catastrophic risk outcomes, since even before Weitzman.) On the other hand, yes, the "dismal theorem" does not provide an exact carbon price trajectory that we should follow. However, it does tell about the direction and certainly urges greater caution than is suggested by traditional IAMs.
On a related note, I recently read a paper by Millner (2013), which provides as good an overview on the "dismal theorem" as I have seen. It is well written, if necessarily technical in places. However, given your evident knowledge and understanding of the subject, I am sure that you will appreciate it. (Working paper version here.)
PS - My reference to Stern's standing as an economist is related to the various reasons why The Review so grabbed the headlines and brought climate economics into the mainstream. Being the chief economist of the World Bank, for example, immediately bestows a much higher profile than most of your academic colleagues; no matter how brilliant they are. (You'll note that I still credit political factors as the primary drivers behind The Review's fame, though!)
Thanks for the reply. I don't know the Millner paper, seems a rather long read, something for the weekend.
DeleteI didnt mean to be dismissive of Weitzman, but I do not see the obvious ramifications. Neither, it seems, does Weitzman:"Other things being equal, the dismal theorem suggests as policy response to climate change a relatively more cautious approach to GHG emissions, but how much more cautious is warranted? / I simply do not know the full answers to the extraordinarily wide range of legitimate questions that DT raises. I don't think anyones does." I.e. after all is said about how the implications of DT for IAMs cannot be ignored, it is not clear what to do. Not only in the sense that policy implications are less precise, but in that they are literally arbitrary. What follows from DT? To be more cautious meaning to rather follow high SCC estimates? But why? Why not say: Hey, take the highest SCC estimate, muliply it by 3, add the average cost of your breakfast, and that is your carbon tax - ? How avoid the conclusion that all emissions are to be shut down immediately? After all, expected disutility is unbound under DT. So, how does this compare to a complete breakdown of the world economy? Should Président Hollande maybe nuke China to avoid its growth in coal-fired plants? Should Kanzlerin Merkel burn sulfur on a massive scale to induce aerosole formation? Should someone make Malema EFFing president so that the wonders of subsistence farming keep emissions down in the hope of famines, or rather avoid it at all cost out of fear of inefficacies leading to even more emissions? I.e. should everything we do be guided by what happens to emissions in the face of the risk of utility approaching negative infinity?
How about the policy instrument? As the Dixit saying goes:"Everything is second-best at best." Can we risk a failure of a carbon tax or some cap-and-trade-solution (sic!) with unbounded disutility lurking in fat tails? What about carbon leakage? The "green paradoxon"? Should we intervene directly? Isn't a great transformation à la Germany the way to go? Or a massive build-up of nuclear power, as Hansen advocates?
That is, whatever their scholarly merits, I think the reason why both the Stern Review and the Dismal Theorem are so well received in some circles is simply that they allow a broad range of basically arbitrary demands. A CBA in a Pigovian framework does not allow for such arbitrariness: a carbon tax it is, and nothing else. Yes, estimates vary, but at the end, the range is wide but limited, and the instrument clear.
More to the point, the arbitrariness follows from a simple implication of DT that Nordhaus identified*:" (...) the result of policies might have unbounded utility or expected utility." You can virtually feel how Weitzman (original paper) struggles to get out of this dilemma with sentences like:"So a tricky balance is required between being overawed by DT into abandoning CBA altogether and being underawed by DT into insisting that it is just another empirical issue to be sorted out by business-as-usual CBA." There is an array of sentences like this in his conclusion - and the thing is, they are entirely sensible - that do not tell us anything that could not be interpreted in a completely arbitrary way (especially, why, exactly, should we NOT abandon CBAs altogether?). If that's the case, it is not Weitzman's fault and no reason to dismiss him: that's simply the problem we face. But at some point, decisions will have to be made, and if we want to make one that does not replace a no-policy (potential) catastrophe by a policy-induced (potential) catastrophe (e.g. geoengeneering on an unlimited scale) or pure chaos, we need a decision criterion under extreme uncertainty. Weitzman tells us everything and nothing at the same time. That's why I mentioned Tol's minimax-paper**.
*http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9779.2011.01544.x/pdf
**http://link.springer.com/content/pdf/10.1007%2Fs10479-013-1343-2.pdf
Martin,
DeleteSorry for the late reply. I was away travelling and only remembered to come back to you now.
By now, you have perhaps had a chance to read the Millner paper. That should hopefully answer some of your questions, at least, about the unbounded (dis)utility in the fat tails, which Nordhaus identified in Weitzman's original formulation of the DT. As Millner writes, such concerns may have "formal validity, but that they apply only to the restricted setup of the original result, which may be extended to address their concerns. They are thus ultimately unconvincing". Weitzman made a similar point in his initial reply to the Nordhaus critique RE alternative "mathematical shells".
Again, I don't believe that Weitzman claims that his theory is meant to provide a precise carbon price. (Quite the opposite!) He certainly doesn't think that climate change should be avoided at any possible cost. What the DT does do, however, is disabuse us of the notion that traditional IAMs/CBAs produce wholly sufficient metrics for determining our optimal response to climate change. (Beyond, the usual caveats and model simplifications that everyone is aware of.) It formalises the idea that there are deep structural unknowns involved in climate change and pretending otherwise is liable to get us into trouble. (Side note: You may know this, but Weitzman has also been advancing related theory that suggests uncertainty is a strong reason for discounting the future at its lowest possible rate.)
You say that the DT ultimately leads us to make arbitrary policy recommendations. Perhaps -- although any policy decision is arbitrary in the scheme of things -- but this doesn't mean that they have to be non-sensible. Clearly, no-one is credibly going to argue that we return to system of mass subsistence farming so as to avoid the potential dangers of climate change. Moreover, as you have also said, there are ways of integrating the essence of Weitzman's argument into existing frameworks... As Anthoff and Tol do in their minimax paper, as Chris Hope has done in his PAGE model. (I've actually read the Anthoff-Tol paper before, but it's certainly a handy reference so thanks for highlighting it.)
Reading your comments (and very thoughtful as they are), I do get the sense that we are in general agreement. My point about Weitzman and the DT then is that it does lead us make better policy decisions. It teaches us to mindful of what we know and can estimate probabilistically, and to try as best as possible to confront the deep structural "unknown unknowns".