Kahn on green nudges and environmental ideology

I saw Matt Kahn present this paper at the POWER conference in Berkeley. It is not surprising, but is nevertheless interesting and previously unexplored. There are, as he notes, some important policy implications regarding targeting messages to recipients that are likely to motivate pro-social behavior. Slate has a column on the research here. Kahn provided this abstract of the paper on his blog:

"Nudges" are being widely promoted to encourage energy conservation. We show that while the electricity conservation “nudge” of providing feedback to households on own and peers’ home electricity usage works with liberals, it can backfire with conservatives. Our regression estimates predict that a Democratic household that pays for electricity from renewable sources, that donates to environmental groups, and that lives in a liberal neighborhood reduces its consumption by 3 percent in response to this nudge. A Republican household that does not pay for electricity from renewable sources and that does not donate to environmental groups increases its consumption by 1 percent.

The green jobs myth

Max Schulz writes in the Manhattan Institute's City Journal about the Obama administration's commitment to green jobs. Regrettably lacking in economic reasoning, he does credit Frederic Bastiat with debunking in the 1800s the notion that putting people to work is itself social welfare improving. This notion--that in times of recession and high unemployment we should employ people to dig holes and fill them in again--has been used to promote the green jobs agenda. But spending on green jobs will only improve welfare to the extent the green workers make stuff or provide services that are welfare enhancing. Digging holes and filling them back in doesn't contribute to social welfare.

If saving lives isn't the goal . . . ban DDT

My very first job working for my advising professor was writing a handbook chapter on the economics of pesticides. Lichtenberg and Zilberman proposed the "safety-rule approach" to pesticide policy determination that combines a probabilistic risk assessment model with a safety-rule decision mechanism. It yields estimates of the uncertainty-compensated trade-off between risk and social cost can be used for policy determinations that rely on formal decision criteria like benefit-cost or risk-benefit. In the context if this kind of criterion, it is clear that bans on DDT, particularly in Africa, are suboptimal. The potential to save lives far exceeds the risks of adverse health effects. One million people die from malaria annually and yet malaria was once nearly eradicated by DDT and could today be killed off once and for all. Yet, those who fight to save millions of lives from malaria do so with one hand tied behind their backs. The dubSJ editorialized in defense of DDT yesterday and suggested that some in the environmentalist movement don't share the goal of many in the health world of actually saving lives:

Earth Day founder Gaylord Nelson, a U.S. Senator from Wisconsin, was a leading opponent of the insecticide DDT, which remains the cheapest and most effective way to combat malarial mosquitoes. Rachel Carson's 1962 book, "Silent Spring," misleadingly linked pesticides to cancer and is generally credited with popularizing environmental awareness. But other leading greens of the period, including Nelson, biologist Paul Ehrlich and ecologist Garrett Hardin, were also animated by a belief that growth in human populations was harming the environment.

"The same powerful forces which create the crisis of air pollution also are threatening our freshwater resources, our woods, our wildlife," said Nelson. "These forces are the rapid increase in population, industrialization, urbanization and scientific technology." In his book "The Population Bomb," Mr. Ehrlich criticized DDT for being too effective in reducing death rates and thus contributing to "overpopulation." Hardin opposed spraying pesticides in the Third World because "every life saved this year in a poor country diminishes the quality of life for subsequent generations." For these activists, malaria was nature's way of controlling population growth, and DDT got in the way.

As with other chemical-use policies and regulation of agricultural biotechnology, policy on DDT could benefit from a dose of Zilberman-Lichtenberg cost-benefit logic.

Where are the green jobs?

The dubSJ reports today that cities from Tampa to Honolulu are trying to invigorate their economies with green jobs. Despite the pledges by politicians from Tulsa to Honolulu, the green jobs aren't yet coming. California is, of course, banking on green jobs replacing brown jobs that will be lost with implementation of AB32. But as UC Berkeley's AnnaLee Sexenian says, it may be a bunch of hype:

People are jumping on a bandwagon. . . Washington needs something to sell. It can't be a panacea for everyone.

The green jobs won't replace all the brown jobs she says. Well, duh! It is Le Chatelier's Principle at work.

New tactics needed for today's war on environmental damage

Today's dubSJ features compelling commentary on how the environmental challenges we face today demand a different strategy. Its author is William Ruckelshaus, the first-ever administrator of the U.S. EPA. He contends the job was relatively easy in the 1970s and 80s: the problem was visible ("yellow sludge flowing into blue rivers," "black smudges against the barely visible blue sky") and the benefits of action accrued to those who undertook the costs (the costs of pollution were borne more or less instantaneously in the form of poor health and environmental degradation). Today, Enemy Number 1 is invisible and imposes costs not on the current generation, but on future generations:

On these kinds of issues where the payer and beneficiary are not the same, the American people are ideological liberals and operational conservatives. They are all for the promised results; they just don't want to pay for them. Little wonder that most people will tell their pollsters they are in favor of reducing the impact of our current lifestyle on future generations, but their scant support for policies that will accomplish that belie their commitment.

To this assessment I would only add that the problem is also a function of the fact current generations that do not contribute to solutions share in the benefits. The basic problem, then, is that in both a spatial and a temporal dimension, the benefits of action on climate change are not fully internalized to the actors. I do believe most would act to protect their offspring if they knew with some degree of certainty that costly action was necessary to protect future generations and if they knew others wouldn't be allowed to free ride. The fact that GHG emissions are a global public bad (that span's traditional political jurisdictions), then, is the biggest obstacle to a climate change solution. It isn't the delay in reaping rewards.

Ruckelshaus is in favor of Pigouvian taxes, roughly speaking, and opposed to heavy regulation in order to solve current environmental problems:

We need more democracy, not less. Trying to enact rules centrally to control the behavior of hundreds, sometimes thousands of people in a watershed when their individual contribution is minuscule, but collectively overwhelming, is futile. We have been trying a command-and-control, top-down approach for the past four decades to control non-point sources of water pollution. The examples of the Great Lakes, Chesapeake Bay and Puget Sound are grim testimony to our failure. If one solution doesn't work, the answer is not to push it harder but to look for new approaches.

This suggests he opposes the current EPA administrator's efforts to regulate carbon emissions under the Clean Air Act. He also suggests that getting good information in the hands of the public will lead them to make "correct" decisions. I am not so convinced, but this premise is something I am currently trying to test empirically in several different contexts. In the end, Ruckelshaus is an optimist, having faith that we can "harmonize human prosperity and growth with environmental protection."

The UK Telegraph, in an unsigned editorial, doesn't want climate scientists to get off so easy after an investigation this week found them innocent of any intentional wrong doing:

A majority of scientists maintain that global warming is a man-made phenomenon. However, they must be prepared to acknowledge that there is another view, for which evidence can also be adduced, even if it seems to conflict with the received wisdom. The findings of the Oxburgh inquiry are not an excuse for again closing down the climate-change debate to the exclusion of those who take a sceptical attitude to what is arguably the most important issue facing the world.

How many carbon emissions has the icelandic volcano caused?

Yikes! At least all that ash is expected to cool the planet in the short run.