The Cost Aspect of Climate Change — What Superfreakonomics Could Have Addressed

Written by admin on December 14th, 2009

A recent post helped illustrate the magnitude of the errors in “Superfreakonomics” — the sequel to the wildly popular “Freakonomics,” by authors Steven Levitt and Stephen J. Dubner.

The authors make these errors in Superfreakonomics trying to be “contrarians.” Yet at the same time, they are extremely conventional with respect to perhaps the most important (and perhaps most misunderstood) aspect of the whole climate change equation.

That is, they rely heavily upon our common — but largely unchallenged — presumption that because certain things inevitably can be “measured” by default, that they are therefore accurately “measurable.” For example, if someone spends 1000 dollars more for a slightly safer car, since the degree of increased safety can now be tied to a dollar amount decision, one has “implicitly” valued one’s own life. Therefore the “value” they place upon it can be reasonably measured, according to popular economic presumption. But this is ridiculous, since what they have done (assuming they have even done so rationally, or with good information) is put a value on risk. One’s own life would be of infinite worth (and therefore immeasurable), since without it almost no other value can be derived, and so become meaningless no matter how large otherwise.

Thus, while Levitt seems to present himself as an outside the box economics thinker, in the most conventional of ways, he is anything but. Yet if he is going to present a unique perspective on climate change, wouldn’t a better idea have been to break down the possible presumptiveness and shortsightedness of the assumption that our economy requires continued heavy fossil fuel reliance in order to flourish?

Instead, he does exactly the opposite. And (incorrectly, it is argued here), adopts the same tone as almost everyone else, by presuming that “cost” is a cost to society rather than a reflection of new production and spending — which it is, as well. And thus that it adds to GDP as much as it might detract, since GDP is ultimately defined by production, and spending. (Another way of putting this is the idea that shifting over to more sensible fuels will not undercut GDP, but serve to help shift what goes into constituting it, by substituting smarter, less destructive processes, for older, outmoded, polluting and atmospheric changing ones.) Yet Levitt, and his coauthor, NY Times reporter Dubner, take the position that they do on climate change because of worry about economic havoc from sensibly addressing climate change.That is, essentially the most conventional position of all, and the “conventional” position that is perhaps the most in need of rigorous challenge.

Here’s what’s funny about this — and not so funny. Those worried about climate change — something which is basic, factual, science (and which represents the general consensus on the issue), are portrayed as doomsayers. Those worried about economic costs — something which relies upon presumption in an extraordinarily imprecise, and in many ways shortsighted field, are not.

Shouldn’t this be flipped around? And shouldn’t a contrarian — even, sometimes to the point of absurdity (such as, for example, on solar panels as noted in the previous post) — economist be helping to lead the way out of this idea that our economy has to be defined in the way that we have come to know in order to provide growth and jobs –rather than serving, in a book that is also otherwise quite misinformed, to further entrench it?

 

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