So I’m trying to think through a simple question: I get that acting on global warming will not pass a cost-benefit analysis when it comes to GDP numbers. But what about everything else that matters in life? How will that be impacted? Let me tell you why I’m asking (do you need a reason!?), and tell you another set of answers I’ve found.
GDP, Markets, Religion
First off, we should just go ahead and say this: most things are going to fail most cost-benefit analysis when it comes to GDP. Look at Manzi’s cost-benefit analysis again. Assuming a GDP loss of 3%, Waxman-Markey fails 10:1. Which is to say, if the expected loss to the United States from global warming was 25% of GDP, Waxman-Markey would still fail a cost-benefit analysis when it comes to GDP. You would have to not vote for it. Perhaps that makes you dislike W-M even more, perhaps it makes you think something is screwy with using the rationality of the method.
Now on some level I don’t understand why we are doing a cost-benefit analysis at the level of the country at the level of 100 years; we have an externality, we tax/regulate it, and the relevant cost-benefit analysis is done at the contingent firm level. Where firms were previously indifferent between high and low carbon, now they make marginal choices, innovate and research which has spill-over effects, and these things lead to a virtuous cycle. Markets work.
Second, I don’t know why we are just looking at GDP. Actually I do – we do because technocrats can measure it. I’m not an anti-growth lefty, but I think GDP measurements are useful for somethings, but not necessarily useful for all things, especially quality of life in a post-industrial information technology society of the 22nd century. (I’m blogging for free, instead of working a second job, for instance.) There are people out there who buy insurance, who leave inheritances for their children. There are people out there who think that God gave us dominion over the Earth is a positive obligation to take considerations other than the Fortune 500 into account. As a lapsed white-ethnic Catholic there’s nothing quite like a good St. Peter at the Gate joke, and here’s one:
St. Peter: “So, this interview isn’t going well. Let me ask you about fighting Global Warming.”
Me, passed away: “Oh yeah, I was against all kinds of measures to fight it.”
St. Peter: “Yeah, what’s up with that? The Big Man was a fan of that Earth he gave you.”
Me: “Sure. But I was really worried doing something would upset computer models of how well the NASDAQ was projected to return in the mid-23rd century, and somethings are too important.”
In the future we’ll all think like Oil Lobbyists
And I think this the NASDAQ point is important. One thing I don’t like about the GDP models, and this is one reason I’ve avoid the modeling debates, is that it causes us to de facto argue from the position of oil lobbyists. Let’s look at GDP by country:
When you look at the second graph, of course the costs to GDP will outweigh the benefits. However realize that everyone in both those graphs needs an equal amount of water to survive the week. We take our ‘values-neutral’ toolbox of convex optimization under uncertainty out of the toolshed, and tell it go ahead and makes sure this distribution of GDP doesn’t get upset no matter how many people go thirsty. It causes us to reify a column in an excel spreadsheet, an indicator of how the investments of that top 10% are doing, as having more agency and claims as our actually lived lives.
Now of course you can saw that markets may have gotten us into this mess, but they’ll optimally lead us out. I hear that with arguments that globalization, water markets, transnational and continental migration, etc. will take care of any of the problems associated with global warming. To me, that requires a level of belief in how well End of History global markets will work that makes Francis Fukuyama look like a white girl with dreadlocks protesting the WTO, so it is not for me at this moment.
In the future, we’ll just camp more.
So what can we use? I’ve been flipping through Warming the World, the modeling overview of the Nordhaus RICE-99/DICE-99 models used for these debates, for clues as to how to rationalize that whole non-GDP portion of our lives under global warming. Now Nordhaus is an economist doing an economic analysis and shouldn’t necessarily be held accountable for these things, and he does support a carbon tax; however since the cost-benefit analysis from his models is leading the debate, I hoped he had an answer.
We get a few. Migration and the movement of cities and people get a GDP cost. Health issues are examined using projections of what we know of previous temperatures (and not diseases from the mass ecology destruction and migration and conflict); an average American will lose .5 years off his life, an average sub-Saharan African will lose 11 years (!!!) off his life. But here’s my favorite: All non-GDP time is leisure time, right? So (assume) anything that isn’t GDP can be accounted for by leisure. So why not just ask people what they do for fun, in the form of time-diaries, and see if global warming will impact it? That’s what they do here, in what is the major non-GDP portion of their modeling and estimates:
I kind of want to bury this answer for my great-grandchildren, so when they wonder why we stood by and let the Earth heat up they can know it was the result of us thinking camping is more fun than skiing, and we’d get to camp more on average if the Earth heated up a few degrees. So 22nd century, feel free to thank us.
I’m probably more with Manzi’s camp than I’d like to admit, though I seriously don’t know how to hurdle these objections. I really like this entry by Matt Steinglass listing some thing not covered by GDP measurements.