Risk Management
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Script
This video is titled “Risk Management” and is part of the expansion pack accompanying the original video “How It All Ends.”
The purpose of this video is to further explore the question of “How do you go about making a decision when faced with uncertainty,” and to expand on the grid about global climate change presented in the video “How It All Ends.”
First, a couple warnings to the viewer. Ronald Reagan said it well in 1985 when he told college students: “Your generation is subject to more information than any generation in history. Let me suggest one thing, don’t let me get away with it. Check me out, but check everybody else out too. Don’t just take it for granted because you read it someplace. Check it out.”
When I first posted the decision grid about climate change in “The Most Terrifying Video You’ll Ever See” in Spring of 2007 I got accused of telling people what to believe. “I’m not telling you what to believe,” I replied. “Well you’re telling me what to think,” some said. “I’m not telling you what to think, I’m telling you how to think,” I said. “Well don’t tell me how to think,” they said. “Crikey!” I said. “What am I allowed to tell you? Why are you watching this? For entertainment? You’ve got plenty of that elsewhere. [Mentos backwards]”
So here’s what I am doing: I’m suggesting how to go about making decisions for yourself in this very complicated issue that has really high stakes, but some uncertainty. But don’t just accept what I say because it sounds reasonable and you like my face. Think it through for yourself. Sort it out with others. Check my sources.
[AT THE BOARD] I got accused of being manipulative too, by oversimplifying. So here’s my official disclaimer. Just because it’s written down or even published somewhere doesn’t make it true. Check it out for yourself. But at the same time, be very careful, because just because you disagree with something or don’t like it doesn’t mean it’s wrong.
For instance, when I make this claim [Write 1+1=10 on the board], you may think “What a dope he is!” But it turns I’m correct, as I explained in the video “How It All Ends: Nature of Science.” If you think it’s wrong, it’s because you unconsciously brought the wrong assumptions to it. So be very careful of doing exactly that as you hear different things in the climate change debate.
[DESK]
So the question before us is, what do you do when
1- You can’t figure out the right choice, but
2- You have to choose.
The answer is: you do the best you can with what you have. As I explained in the video “How It All Ends: Nature of Science,” we cannot have certainty on climate change, so we’re just going to have to tolerate some ambiguity. It is incredibly unlikely that we will get the answer exactly right, and spend the exact right amount of money and resources to get the exact effects we want.
That means no matter how careful we are, we are either going to overspend or underspend. And let’s be big boys and girls about this: that means we can either err on the side of overspending, in which case we “waste money” but get done what we want to get done, or we can err on the side of underspending, in which case we don’t waste any money, but less gets done than we wanted.
Anyone who says that’s a false choice and that we can spend exactly the right amount of money to get done exactly what needs to get done is either lying to you, or just dumb. Sorry—no need to be mean. They’re either being disingenuous, or they haven’t fully thought things through yet.
So, the formal process of doing the best with what you have is called “risk management,” and it’s a great tool that’s used all the time by industries and governments.
What risk management does is relieve you of the necessity of knowing things for certain before making a decision. That’s the really powerful part: you don’t need to know the truth, in order to still be confident that you’re making the choice that will most likely bring you what you want. And that’s a big relief, because it means you and I don’t need to sort out all the arguments about climate science.
We can leave that to the people who actually know what they’re doing. Like I said before: during WWII, would you have insisted on personally resolving all common sense contradictions of atomic physics—like the ideas that matter and energy are the same thing—before agreeing that the Manhattan Project was a good use of resources? No.
You and I are not qualified to evaluate the science, so we shouldn’t get too cocky about trying. This is why objections like “100 years of data is not enough to know thousands of years of the past climate” always curl my toes. Who the heck are you to say that? Have you studied the various competing statistical models for integrating proxy data into supersets? Can you even tell which parts of that sentence are valid and which parts I just made up?
Or are you applying that “common sense” that, as we saw in the video “Nature of Science,” is so woefully ill-equipped for evaluating complex scientific evidence?
There’s a reason it takes a long time and a lot of coffee to get the letters “P,” “h,” and “D” behind your name in the sciences. What you and I are qualified to do, is basic risk management. Which is good, because that gives us the oversight of the whole process. That hopefully answers the objection “Well, we can’t just surrender control of our future to a bunch of eggheads who we don’t know and never elected.”
They do the science, and then we weigh the risks and costs, and—as a society—decide what to do. So by trusting scientists to do science, we are in no way abdicating control of our lives to the scientists or the government. We retain that. (That is, if you vote.)
Okay, so how do we go about doing this risk management? Turns out it’s a whole field of study, but we can simplify it a bit for our purposes, and take a page from the playbook of casinos and insurance companies. Both of those stake their existence on potentially huge costs associated with unpredictable events. So how do they manage to stay in business, and in fact, turn a healthy profit? Well, it pretty much boils down to something called “Expected value.” It’s worth taking a look at.
[AT BOARD] Let’s take a simple example and say you’re playing a game where you buy a ticket, and that ticket has some likelihood of paying off. We need to distinguish here between two different ideas. The first is the probability that the ticket will pay off. That’s expressed as a number between 0 and 1. 0 means it cannot payoff, 1 means it will definitely pay off, 0.5 means it has a 50% or 1-in-2 chance of paying off.
The second number is the consequence, or what happens if the ticket pays off—what you win in this case. Every ticket has a probability, and a consequence that go with it.
So let’s say the game is such that 1 ticket costs $1, has a probability of 0.5 (or a 1-in-2 chance of winning), and the consequence is the house gives you $2 (that’s the payoff if your ticket wins). Now, we can’t say what will happen with a given ticket, whether it will payoff or not, but we can track what happens over a large number of plays. To make it easier to understand, let’s say the winning happens at even intervals.
cost 1 1 1 1 1 1 1 1 1 1 1 1 1
consq. 0 2 0 2 0 2 0 2 0 2 0 2 0
Over 12 plays, your total cost is 12 x $1 or $12, and your total winnings are 6 x $2, or $12. You broke even.
The expected value is a way to predict at the beginning whether you’ll break even or not, by looking at what one ticket—on average—is worth. You won $12 over 12 tickets, so your tickets—on average—brought in $1 each, even though no single ticket did that. That’s the expected value of the ticket, one dollar, and you can calculate it before ever playing the game in a very simple way.
To get the expected value of an action (in this case, buying a ticket), you just multiply the action’s probability by its consequence. Here, 0.5 x $2 = $1. So at the very start, knowing the odds and the payoffs, you can compare the cost of a ticket ($1) to that ticket’s expected value ($1) and see that over time, you can expect to about break even.
What if the odds change? Let’s say the probability of the event (a ticket winning) goes to 1-in-4, and the consequence stays the same. Now the expected value of a single ticket is 0.25 x $2 = $0.5, while the cost remains at a dollar. Now you know you can expect to lose money.
Does that mean you will lose money? No. You may come out ahead. But you can expect not to. If you’re there for a good time and can spare the cash, go for it, have fun. But if you’re betting with your retirement, that game wouldn’t be a very wise choice.
[BACK AT DESK] Before we apply this to the climate change grid, I want to be clear on something. Some critics of my older video kept shouting “But that’s just a PREDICTION” (all caps), as if that means it’s pure conjecture. Predictions are not statements that something WILL happen, but that something might happen, and the better the prediction, the more robust the work that went into it, the more likely it will turn out to be true.
For instance, if I’m betting on a roll of a pair of dice with all payoffs being equal, I’m going to bet on the seven, because my study of past dice rolls predicts that a seven is the most likely outcome. But betting on a seven doesn’t require that I believe it will happen. It just means that based on my study, it’s my best bet, it’s expected value is the highest of my choices.
And before you go crying “but the expected value is a flawed mechanism—what about the St. Petersburg Paradox?” I’ll just make the point that if it’s good enough to turn a profit for casinos and insurance companies, it’s good enough for our purposes here.
So to use this device of expected value for our grid about action on climate change, we need to get some sense of the probability of the two rows, and the consequence of the scenarios in each box. But with “the Google” here to serve up statements supporting pretty much any conclusion we want, how do we sift through all the noise to come up with a confident assessment of probabilities and consequences?
The problem is, you can read Michael Crichton’s State of Fear, and then Fred Pearce’s With Speed and Violence: Why Scientists Fear Tipping Points in Climate Change. You can look up the “Leipzig Declaration” and then the “Scientists’ Warning to Humanity.” And at the end of the day you’ll still be left with the question “But they all contradict each other, so who’s right?”
I know it sounds like I’m making the point that it’s futile to do any research, but I’m not. I’m trying to make the point that if you want to get anywhere, you can’t just read stuff. You’ve got to do things differently: to examine the source, to look at credentials and possible bias, to take a step back and ask not “Who should I believe,” but instead “What is the process I will use to decide what to go on?”
I’d suggest you do it by assigning weight to different statements based on the credibility of the source. As a science teacher, I’ve spent a lot of my time thinking about how you evaluate claims and assign credibility to sources. That doesn’t answer the question “What should I believe,” but it does provide an answer to the question: “Given the uncertainty, what is probably the most useful statement to move forward with?” Which, really, is the fundamental question you’re faced with at the heart of most matters.
As a disclaimer, I’ll point out that these are just general guidelines—any source could be wrong, and as a colleague of mine is fond of saying: “Even a blind squirrel finds a nut occasionally.” So this is a tool to use just as a starting point.
[AT THE BOARD] I would place sources on a spectrum running from less reliable to more reliable, based on two factors. One is: how much does the source know about what they are doing? Are they trained? Are they speaking about their expertise? Are they conscientious? In other words, how likely are they to arrive at a correct conclusion?
The other factor is: how likely are they to spin that conclusion? Do they have an agenda of some sort? What’s the likelihood that they are biased in some way that will affect what they choose to tell me, and what they don’t?
Using those, I’d say at the very bottom of our spectrum lies the individual lay person—who doesn’t necessarily have expertise, and may very well have an agenda. That’s not to say there’s nothing to be learned from individuals, though. They can be useful for new ways to see things, or directions to go. It’s just that you don’t want to rely on their information any more than is necessary. Like Reagan said—check out what they say for yourself.
I would give more weight to the individual professional who is speaking about their area of expertise, because they may have an agenda, but at least they know what they’re doing. I might give still more weight to think tanks and advocacy groups—like the Cato Institute or Greenpeace. They’ve still got an agenda, but they’ve got greater resources than just a single person, and so can be more thorough.
For example, I found an interesting figure about atmospheric carbon dioxide I wanted to use in this project. So before throwing it into the video script, I looked at who provided it, and saw that it was someone with a Ph.D. after his name (better than nothing), from the Environmental Defense Fund (not as credible as I’d like—their agenda is right there in their name). So what do I do? I go look it up somewhere else! Because I’m looking for the truth, not just support for my beliefs.
Now this one, I’m not sure where to put—floating somewhere around the middle, I guess—petitions and other self-selecting statements, like the Oregon Petition or the Economists’ Statement on Climate Change. They may very well know what they’re doing (you should check to see of the signers have expertise in the area), but the big problem is the signers are self-selected—by definition, there are no dissenters on there, so their spin factor can be fairly high.
They really are susceptible to the trap of confirmation bias I described in the video “Nature of Science,” though they can be pretty credible as well. For example, the Oregon Petition was a project of a small think tank of six employees in rural Oregon, while the Economists’ Statement on Climate Change had 6 Nobel Laureates sign it, so I wouldn’t give equal weight to the two, even though they both fall into this category. Again, it depends a lot on who the signers are.
Somewhere in here I’d put university research programs. They’re generally more credible than think tanks, because they’re a couple of funding steps removed from vested interests.
Now we’re getting into the pretty credible stuff: peer-reviewed scientific articles. As I noted in the video “Nature of Science,” this is getting close to “the best that science can offer,” because it’s gone through a bruising process of critique by experts in the field, and only gets published if the journal in question feels it’s up to snuff.
Now, some journals are higher quality than others, and their publications can be weighted more—there are a ton out there, but anything from the journals “Science,” “Nature,” “The Proceedings of the National Academy of Science,” or “Physical Review Letters” is going to be literally the best you can get in science—they generally don’t publish an article unless they believe that it marks a significant breakthrough in its field.
I just recently discovered a danger in this rule of thumb about trusting peer-reviewed stuff, that you should be aware of if you’re going to be analyzing sources. Usually when someone gives me a reference to back up what they’re saying, my first question is “Is it peer reviewed?” And generally the stuff that’s skeptical of human-caused global climate change hasn’t been published in a peer-reviewed journal, because it didn’t fit the expectations of rigor that most peer-reviewed journals maintain.
But I recently learned there is now a small journal named “Energy & Environment,” which I’ve read most scientists don’t take seriously, but which does have its own peer review process. The upshot is—and the editors admit it—it’s an outlet for climate skeptics to get their stuff published, so that others in the political and popular debate can then cite “peer reviewed” scientific studies that show global warming isn’t such a big deal after all.
I find that scary. It seems like an abuse of trust, cuz scientists know which journals are more reputable than other, and so they know how much weight to give to the publications of different journals, but the public doesn’t—to us, if it’s “peer-reviewed,” then it must be solid stuff. That used to be true. Thankfully, it still is for the most part.
Here we get to the two types of sources that I think carry the most weight, and I don’t think I’d rank one over the other in general. Here you’d put statements from an organization that contradict its normal bias. For instance, if the local timber lobby said “We’ve got to thin out this forest for its own health” you wouldn’t be that convinced, but if the Sierra Club made the same statement, you’d sit up and take notice. The reasons must be really compelling if the Sierra Club is going to contradict their normal message.
Finally, there are professional organizations. That is, organizations that exist not to advance a particular agenda, but to simply serve the communication and training needs of a particular profession, like the American Medical Association, the American Institute of Architects, etc.
Not only are they made up of people who know what they’re doing, but for the association to actually come out with a statement generally requires that most of the members agree with it, so there’s going to be a bruising and very thorough process to make sure it’s not some whim or a flimsy statement that may later embarrass the organization.
It’s important to note that I just totally made up this credibility spectrum. This is just what I do when I’m deciding how much weight to put in statements I read, and I’m suggesting it here as a tool to use in our discussions. If you have a better tool or some insight that refines this, please share it with me. And, while I’m quite confident of the two ends, the middle can get pretty mixed up.
For instance, you may find a book published by a think tank, but it was written by a professional individual, and so shouldn’t necessarily be given more weight than any other book. You really have to think about what biases might be present in any given example. Remember: this is just a starting point.
Now, armed with our credibility spectrum, we can explore the grid more.
PROBABILITIES
[DESK]
Let’s start by trying to get a sense of the probability of human-caused global climate change being true. Before we look at direct statements about it, I’ll share a rule of thumb that may be useful to you, if you have the inclination. Look at what scientists are saying to each other when the media isn’t interviewing them. I regularly read some scientific and lay scientific literature, and I’ll tell you, for a number of years now, the tenor about climate change has been not at all controversial.
Generally when it’s mentioned, it assumes the reader is on board with the idea that humans are causing the climate to change. The hot debate is on what exactly that will look like, and how fast it will happen. That should tell you something.
In the video “How It All Ends” I shared that the two most well-respected scientific organizations on the planet—AAAS and NAS—recently called for significant and immediate action on climate change. They fall into that topmost area on our spectrum of credibility, so it’s worth looking at exactly what they said.
The American Association for the Advancement of Science, or AAAS, has 144,000 members, has been around since before the Civil War, and is the publisher of the journal “Science”—the gold standard for peer-reviewed journals. In December of 2006, it approved an unprecedented statement calling for action on climate change. Next time you hear someone matter-of-factly say global warming is bunk, remember these next couple paragraphs, and who wrote them:
[On board: Google “AAAS statement climate change”]
The AAAS statement, starts out:
[ON SCREEN] “The scientific evidence is clear: global climate change caused by human activities is occurring now, and it is a growing threat to society. Accumulating data from across the globe reveal a wide array of effects: rapidly melting glaciers, destabilization of major ice sheets, increases in extreme weather, rising sea level, shifts in species ranges, and more. The pace of change and the evidence of harm have increased markedly over the last five years. The time to control greenhouse gas emissions is now.”
[DESK] Remember—this isn’t Al Gore talking. This is the AAAS.
[ON SCREEN] The statement continues on to say: “As expected, intensification of droughts, heat waves, floods, wildfires, and severe storms is occurring, with a mounting toll on vulnerable ecosystems and societies. These events are early warning signs of even more devastating damage to come, some of which will be irreversible. Delaying action to address climate change will increase the environmental and societal consequences as well as the costs. The longer we wait to tackle climate change, the harder and more expensive the task will be.”
[DESK] Doesn’t this make you little nervous? This isn’t from your local “save the stream” organization. These are the guys who know what they’re doing better than anyone else in the world.
And the statement ends with an uncharacteristic call for action.
[ON SCREEN] “It is time to muster the political will for concerted action. Stronger leadership at all levels is needed. The time is now. We must rise to the challenge. We owe this to future generations.”
[DESK] This isn’t Greenpeace. These are some of the stodgiest, most well-trained, intelligent people on the planet. They’re not infallible, but if you’re not going to listen to what they have to say about a scientific issue, then who are going to listen to? It’s not a rhetorical question. Who would you listen to?
Maybe the National Academy of Science. NAS, which is pretty much the other crown jewel of scientific societies, has 2,100 members (1 of every 10 members has won a Nobel Prize), and has been around since 1863.
The NAS statement of June, 2005 wasn’t just from the NAS. [Google “joint academies climate change”] It was a joint statement made along with the national academies of the other major industrialized countries (the G8), and included China, India and Brazil as well.
[ON SCREEN] The NAS statement said: “The scientific understanding of climate change is now sufficiently clear to justify nations taking prompt action,” and it called on world leaders to “Acknowledge that the threat of climate change is clear and increasing,” and to “Recognize that delayed action will increase the risk of adverse environmental effects and will likely incur a greater cost.”
[DESK] There you have the two most well-respected scientific organizations on the planet (along with the national science academies of pretty much every other major industrialized nation) both saying: the globe is warming, we’re the ones doing it, it’s going to be bad, and we’d better do something about it quick. That is huge. This isn’t just a couple, or a dozen, or a hundred scientists talking.
That doesn’t mean every member agrees with the statements, but if AAAS and NAS say something about a topic in science, that is the closest we are ever going to get to a statement of “What science knows.” They are the Science Establishment (capital letters). If that’s not good enough for you to change your mind, then I gotta tell you—nothing from science ever will be. Cuz it just doesn’t get any stronger than that.
It’s worth noting here that both the AAAS and the NAS statements explicitly endorsed the findings of the IPCC (Intergovernmental Panel on Climate Change). I mention this because a lot of skeptics simply dismiss the IPCC as a political hack, implying that its findings are incompetent and biased. Well, maybe now that won’t be so easy, given the endorsement of the top two scientific bodies in the world.
AAAS coming out and saying that climate change is a real problem that needs to be dealt with fast is a lot like when the AMA came out and said that smoking was bad for you. You could still find doctors that disagreed, but the issue was pretty much as close to settled as it could ever be. The only way it could get any more settled would be if the tobacco companies themselves admitted it. Which they finally did, long after it was obvious to everybody that they’d been financing a misinformation campaign.
Well, it turns out, we can take that analogy even further. Because remember the other category at the top of our credibility spectrum—organizations making statements that contradict their normal stance? In the video “How It All Ends,” I briefly shared—okay, I flashed it on the board for a little over one second—a tiny bit of the statement from the [SMALL BOARD] US Carbon Action Partnership (USCAP), which includes Shell, BP, ConocoPhillips, Ford, Chrysler, GM, GE, PGE, Dupont, and Dow Chemical. These guys are calling for mandatory requirements on carbon emissions—on themselves!
And get this: last year, none other than Exxon CEO Rex Tillerson himself said about climate change: “The potential risks to society could prove to be significant, so despite the areas of uncertainties that do exist, it is prudent to develop and implement strategies that address the potential risks.” [Google “Rex Tillerson prudent”]
He may not sound totally gung-ho, but given that Exxon has long been the poster child of corporate climate change denial, that’s pretty much like the tobacco companies finally saying that yes, it may be that cigarettes can harm you. Plus, for the first time last year, Exxon didn’t donate to the Competitive Enterprise Institute, a think tank that has been at the forefront of the climate change issue.
In the past, when I’ve cited the AAAS and NAS statements, I’ve sometimes heard the criticism that those citations are just “argument from authority,” and are therefore useless. Talk about grasping at straws. The criticism can be valid in a formal logic structure—like in mathematics. But if we’re talking knowledge about the physical world, of course authority matters.
“Honey, remember your doctor warned that if you didn’t cut down on the salt, you’ll have another heart attack.” “Don’t just argue from authority. Explain to me the details of cellular metabolism and osmosis, or I eat as many chips as I darn well please.”
And ask yourself this: does the Earth go around the sun, or does the sun go around the Earth? No one even seriously questions that anymore, right? Try this sometime. Stand and point to the sun in the sky. A few hours later, stand in the same spot, facing the same direction, and do it again. Is your arm pointing in the same direction as it was before? No! Clearly, the sun is the thing that moved, and clearly, the Earth is too large to have gone anywhere, and is right where you left it.
If your senses—and your common sense—are so easily fooled, then how do you decide what to believe about the natural world? Well, why do you so firmly believe that the Earth orbits the sun, despite all evidence and common sense to the contrary? You believe it because: smart people told you so. And you trust them, when it’s their area of expertise, and enough of them agree. Of course authority matters. That doesn’t mean it’s infallible—just ask Galileo. But it’s certainly a better bet than armchair analysis.
So who is providing the rebuttal to AAAS, NAS, and USCAP? I’ll share a handful of names, and if you keep your eyes open, I guarantee you’ll recognize them in the future, cuz they come up again and again. [SMALL BOARD] Lindzen, Landsea, Singer, McIntyre, McKitrick—they’re almost all professional individuals. Remember—there are a lot of people out there to cherry pick from.
Maybe this is the origin of the objection I sometimes hear: “It is true that the climate is changing, but there’s a lot of debate about whether we’re the ones causing it.” Hopefully you see now from the AAAS and NAS statements that no—there really isn’t debate about the cause of climate change. At least not in the scientific community, who really are the only people actually qualified to debate the evidence.
And these scientists who are climate skeptics? You’ll hear them complain again and again that they’ve been marginalized because they spoke out against the orthodoxy. No. They’ve been marginalized because they no longer have any credibility with the other scientists. No one will even debate them, because they’ve gotten so far out there. Incidentally, that’ll be a claim you hear, too—”The chickens won’t even debate me, because they know I’m right.”
So you will see quotes from guys with scientific-sounding titles after their name, giving reasons that human-caused climate change is bunk. They can be found. The Google is a wonderful thing. But just because someone on the web can provide quote after quote doesn’t make the case convincing. Volume doesn’t count for much when you’re down here on the spectrum. The only category less credible than the one these guys are all in is some random jerk on YouTube. Wait.
[Beat]
Speaking of us jerks on YouTube—[we jerks? we jerk? !!!]—speaking of YouTube, I’ve had a bunch of people send me links to at least 3 separate documentaries on YouTube “proving” human-caused global warming to be false. Now, if someone sends you such references, you can either look up the criticism of those movies (being sure to evaluate the credibility of those providing the criticisms), or you can save time and short-circuit the whole debate by simply asking the person who sent you the links: “What is your explanation for why these filmmakers would be more correct about the science than AAAS and NAS?” If they fall back on “Well, the scientists have a vested interest in people listening to them, cuz it keeps the grant money coming, so they’re biased,” try applying that standard to the filmmakers—filmmakers vs. scientists for Pete’s sake! Is it really reasonable to think that scientists’ paychecks are more vulnerable to the public’s tastes than filmmakers’?
[BOARD, GRID] Make up your own mind, but like I said in “How It All Ends,” it sure seems to me that the reasons are overwhelming to believe that this row has a much greater probability than this one, pushing this line up.
CONSEQUENCES
[DESK] Now remember, we’re trying to get a sense of which column is our best bet by using the tool of expected value, which has two components: probability—which is what we’ve just been establishing—and consequence.
With the consequence, it’ll be a little confusing here, because in my earlier example about expected value, the consequence was a payoff from the bank, and therefore a positive thing, that we wanted to maximize.
Here, the consequence is going to be the negative impacts of our actions, which we want to minimize. So once we get our expected value, we’ll want to pick the column with the lower expected value, because it will give a sense of the pain and suffering we can expect from choosing that column.
Another complexity is going to be that—unlike with our gaming example—we don’t know what the consequences in a box will be. That in itself has lots of uncertainties. In fact, in a long back-and-forth with one skeptic as I was trying to find a credible source for the possible consequences here, he finally got exasperated and said “Economic models are even less reliable than climate models!” Which I thought was kind of funny, cuz skeptics are usually all over climate models like a bad rash.
[BOARD, GRID] So when you hear skeptics warning that we shouldn’t take action because it might hurt the economy, ask yourself—or ask them, if you’re feeling up to it—where’s the acknowledgement of uncertainty here, that is the hallmark of the careful, methodical scientist down here?
[DESK, different angles] A: “Anthropogenic global warming is uncertain, and might [have the word “might” flash in real time on the screen] not be true, so we shouldn’t take action yet.”
B: “Why not take action, just in case? Better safe than sorry.”
A: “Because it would [flash “would’] hurt the economy.”
Did you catch the Jedi Mind Trick?
Maybe this hypocrisy of implying certainty for their side while attacking the uncertainty of the other side will count for something when you evaluate these arguments for yourself in the future. After all, where’s the wisdom in ignoring the warnings from the more reliable model of climate change, in favor of heeding the warnings of the weaker model of economics?
[BOARD, GRID] Anyway, to simplify our expected value estimation, let’s neglect putting in the proper range of consequences in each box, and instead just take the feasible worst-case scenario, because that’s what we really care about, right? “What’s the worst that could happen?” That gives us a single value for a consequence that we can then multiply by the probability of the row to get the column’s expected value.
Let’s start with the upper left box, where we took action, but didn’t need to, because human-caused climate change turned out to not be true after all. This is the consequence that the skeptics warn us about. When I first did this grid in “The Most Terrifying Video,” I put in worldwide depression up there. But get this—I just pulled that out of my hat—I totally made it up! Because I was trying to show extremes.
But people got hung up on it, so this time I decided to try to get some reliable sources instead of just blowing smoke. I did a bunch of searching, because I wanted to find some really credible stuff, maybe a professional association of economists, like AAAS and NAS, but from the other side of the debate.
I wasn’t finding much that wasn’t on the bottom of the credibility spectrum, so I challenged climate skeptics to find good sources predicting dire economic consequences for me. I put the challenge in the comments to my “Most Terrifying Video”—I was even deliberately brash, trying to provoke response. It felt kind of naughty.
I had a long back-and-forth with a quite thoughtful, educated guy who referred to his first long response as “The Thinking Man’s Objection to AGW,” a description I found a little odd. I emailed the big conservative think tanks: Cato, CEI, AEI, Heritage. I asked for help in some climate skeptic discussion groups. I even emailed Prof. Ross McKitrick himself—one of the most prestigious skeptics, who is a professor of economics at the University of Guelph in Canada. I figured if he didn’t know, nobody did. And he sent me several documents.
The reason I went to such great lengths was I was want to avoid the confirmation bias described in my video “Nature of Science” by trying to find evidence to disprove my views. I hope you’ll agree that I did a conscientious job looking.
Well, if you’re skeptic, don’t get your hopes up, cuz with all that, I couldn’t find any credible economic disaster scenarios—that is, from sources above conservative think tanks or professional individuals on the credibility spectrum. To be honest, I didn’t even try to find anything from those sources, because I knew I wouldn’t put much stock in it. Maybe economic disaster scenarios resulting from unnecessary action on climate change doesn’t even exist above the individual lay person, which would really say something, wouldn’t it?
Anyway, the most dire stuff I could find that was credible entailed a reduction in GDP growth, with a maximum estimate of 3%. Keep in mind, that’s not a reduction in GDP—that’s a reduction in GDP growth, meaning it’s not growing as fast as it otherwise would have. There’s a ton more econometric numbers in there, but I couldn’t find any sort of concrete description of the fallout of that, like a depression.
And that 3% was the outside prediction—most credible sources put it closer to 1.5-2%. Certainly no mention of a depression, even in just the U.S. If you’d like to look at the documents Prof. McKitrick sent me, I’ve made them available online—perhaps they’re more dire than I could make out. I put them on GoogleDocs and I’ll provide the URLs at the end of this video.
Sorry for the formatting disaster—I received them as pdf’s, which GoogleDocs doesn’t accept, so I did what I could to make them available. I’m sure there are plenty of you out there smarter than me. Let me know what you figure out.
[BOARD, GRID] So, no depression up here. Just some wasted economic resources that could have gone for something else, but no global depression giving rise to the next Hitler or nuclear war. Let’s not trivialize the economic costs—I’ve been laid off before because of a recession. It sucks. But compared to what’s in the lower right corner—well, we’ll get to that.
[DESK] The other source a bunch of people pointed me to was a project called the Copenhagen Consensus, headed by economist Bjorn Lomborg, author of The Skeptical Environmentalist. It was an interesting project where 8 economists, 4 of them Nobel Prize winners, got together and asked “Faced with all the world’s problems, if we had 50 billion dollars over the next four years to spend to do good in this world, where should we spend it?”
They ended up putting climate change on the bottom of their list, for some interesting reasons, which I won’t debate here for two reasons. First, it doesn’t help us with our grid, because it doesn’t answer the question “What is the feasible worst-case scenario for harm if we take action on climate change and it turned out to be unnecessary or ineffective?”
And the second reason is, because if you Google “economists’ statement climate change,” [on board] you’ll see that Lomborg’s self-selected group of top economists (including 4 Nobel Laureates) is countered by another self-selected group of top economists (including 6 Nobel Laureates), which conclude, amongst other things, that [ON SCREEN: “ECONOMISTS’ STATEMENT ON CLIMATE CHANGE” — Feb. 13, 1997] ”. . .there are many potential policies to reduce greenhouse-gas emissions for which the total benefits outweigh the total costs. For the United States in particular, sound economic analysis shows that there are policy options that would slow climate change without harming American living standards, and these measures may in fact improve U.S. productivity in the longer run.”
They say action would actually be good for the economy, which is an argument I’ve heard a lot of individuals make. Things like “energy efficiency saves money,” “early pioneers in an industry make the big money,” and so on, which is food for thought, but doesn’t help us with our expected value calculation.
Now, I know I said let’s not take into account the range of possible consequences in a box so that we’re just looking for disaster scenarios, but I found something interesting along the lines of action having positive rather than negative effect on the economy that I thought was interesting. USCAP, that group that includes all those heavyweight companies like Shell and Ford, says some surprising things in their document. Most notably:
[ON BOARD] ”In our view, the climate change challenge, like other challenges our country has confronted in the past, will create more economic opportunities than risks for the U.S. economy,” including (my paraphrasing)
- creating new markets
- increased U.S. competitiveness
- reduced reliance on energy from foreign sources
- increased energy security
- improved balance of trade
- world leadership for the U.S.”
[DESK] These guys make this box sound like a party! What a deal—reduce the chance of a global catastrophe, and get paid to do it! Sign me up!
But wait, if it’s such a good deal—if you can cut emissions and not pay a cost—then how come not all businesses are doing it yet?
Look, change is hard—for all of us—okay? There’s a reason that the phrase “business as usual” is used to refer to not being innovative or seeking to improve. It’s way easier that way. Plus, that question sort of assumes that businesses are all-knowing, doesn’t it? That if businesses aren’t doing things a better way now, then that must be because a better way doesn’t exist? That it never takes time, or pressure, to come up with better ways to do things? That necessity isn’t the mother of invention, but just a distant cousin? Sometimes, a prod is helpful.
In 2002, BP committed to cutting its own CO2 emissions by 10 percent over ten years, to get good publicity. At the time they calculated that they could do it at no net dollar cost, and would get great publicity. Well now, they say it’s going to end up saving them $650 million through energy efficiency! That’s cool! And it shows that the dire warnings of the economic doomsayers are really starting to look pretty flimsy.
Along those lines here’s another thing I turned up that I want to share here as you are making your own evaluation of the predictions of economic doom and gloom that the hard-line skeptics seem to so often resort to. [SMALL BOARD] Google “Backgrounder #1229,” and you’ll get the Heritage Foundation’s commentary on a 1998 DOE report about the economic impacts of the Kyoto Protocol. (The DOE report was actually one of the documents Prof. McKitrick sent me.)
The Heritage Foundation’s article is subtitled “More Bad News for Americans,” and their lead economic consequence, the biggest, scariest impact that they chose to highlight to warn the reader of the “Devastating Economic Consequences” was: if we followed the Kyoto Protocol, by the year 2010 a gallon of gasoline could cost as much as $1.91. I had to laugh. I mean, to be fair, there’s lots of other numbers in there. But that’s the scariest thing that they could dredge out of the report, and they repeated it three more times! Given that they’re always calling the people who advocate action on climate change “Chicken Littles,” you just gotta appreciate the irony.
What wasn’t a laughing matter, however, was how deviously manipulative the article was. It was supposedly about the DOE’s report, but woven in with the mild quotes from the DOE report were quotes from “a nationally recognized econometric firm,” which were the ones predicting dire consequences. The carefully crafted message that the casual reader takes away is that the heavyweight DOE report predicted harsh economic consequences from the Kyoto Protocol, something that simply wasn’t true if you looked at the actual report. I take the time to relate this to you in order to underscore the importance of evaluating your sources. That Heritage stuff was downright slimy.
[BOARD, GRID] Yet another rosy economic view of the upper left box by a heavyweight economist is the Stern report of the British government, which says this will cost 1% (pointing at upper right box) of GDP, but this would cost 20% (pointing at lower right box).
So try as I might, I just couldn’t find a credible economic disaster scenario for this box. That doesn’t mean it doesn’t exist—maybe you’ll find one and send it to me. But I think you’ll at least agree that I tried to be conscientious in looking.
But really, I didn’t need to do all that looking, and you didn’t need to do all that listening, because here’s a point that makes the severity of the economic costs up here moot anyway. Think of it this way if you’d like: the main idea of those who warn that the negative consequences up here are worse than the negative consequences down here, is that government spending and regulation would be bad for the economy. For the moment, let’s simply accept that thesis. Now, imagine the scenario here: we take action on a nebulous threat, but we have the time to do our best to ease the restrictions into place in a planned and thoughtful manner, to minimize the chance of disrupting the economy, skeptics have time to protest, the usual mess of capitalist democracy in action.
Now, imagine the scenario down here. We chose to not take action on climate change, and it ended up happening, despite what anyone’s opinion was. A world full of natural disasters. Will we just sit there and take it? No. If we’re getting battered and bruised, we’re going to do something about it, quickly. And in a panic. Extreme things, maybe even draconian things, because our coastal cities are flooding.
So if planned, controlled action up here is bad for the economy, how much worse for the economy will panicked, harsh action down here be? An economy which has already been battered by disaster after disaster in a destabilized climate and has fewer natural resources like croplands and predictable growing seasons.
Up here you’ve got negative economic consequences, and anything that flows from it. Down here, you’ve got all of that—every bit of disaster scenario that the individual lay blogger wants to conjecture—plus a bunch of bonus features. So no matter what feasible worst-case economic scenario we grant up here, it is included and made worse down here.
So, we’ve made a very conscientious effort to find credible worst-case economic scenarios that spell disaster up here, and haven’t come up with much.
Let’s now look at that other big negative consequence on the board, where we chose to not take action—or we debated too long (same thing)—and human-caused climate change turned out to be true. Here our feasible worst-case scenario gives us political, social, environmental, public health, and economic catastrophes on a global scale.
Sea levels rise 20, 30 feet, entire coastal countries disappear, hundreds of millions of refugees displaced, pushing in on each other, causing widespread warfare over scarce resources and ancient hatreds, entire forests die and burn, massive floods alternate with killer droughts, the breadbaskets of the U.S. and Russia turn to dustbowls, leading to catastrophic famines, dreadful epidemics spread like wildfire, storms like Katrina and Mitch are the norm, plus all the economic harm from up here, exacerbated by haste and natural disaster.
We’re talking a world straight out of science fiction, a world that makes Al Gore look like a sissy Pollyanna with no guts who sugar-coated the bad news. If the statements from the experts aren’t enough for you in deciding which column is the better choice, just bring your common sense to bear.
Which situation sounds like it would do more damage to the economy: government spending and regulation up here, or a world halfway to Mad Max’s Thunderdome down here?
Watch the video “How It All Ends: Scare Tactics” if you want details for where that picture comes from.
So, let’s recap, and then we can apply the expected value calculation.
First, to establish the probabilities of these two rows, we looked at a bunch of sources.
[BOARD, credibility spectrum with sources on sides] These sources essentially say that human-caused climate change is most likely true and serious. These sources say that human-caused climate change is either not true, or true but not serious. Looking at where all of these sources fall in terms of our assessment of their credibility, it seems pretty much irrefutable [BOARD, GRID] that this row is much more probable than this row, which we can represent by moving this line up.
Then, in terms of consequences, we decided to not worry so much about the range of possibilities, and simply accept the feasible worst-case scenario for each. Up here, we’ve got reduced GDP growth, and all that ripples out from that.
Down here, we’ve got what seems to be almost a Mad Max world. We’ve stacked up Lomborg’s 4 Nobel Laureates vs. “The Economists’ Statement on Climate Change’s” 6 and called it a wash, as well as showing that any negative economic consequences up here are not only included, but also made worse down here. And we’ve deferred looking at the details behind the physical consequences here to the video “How It All Ends: Scare Tactics.”
Now for the hard part—we need to come up with some actual numbers for probabilities and consequences in order to then do our expected value calculation. Except, lucky for us, we don’t. Because we’ve just hit a special case in expected value. We’ve established that both the consequence and the probability of this are greater than this.
And if you go back to our original gaming example, you’ll see that in such cases we don’t even need actual numbers in order to know which expected value will turn out larger. Play with it, and you’ll see that no matter what the exact numbers are, if both the probability and the consequence of this box is greater than those of this box, the expected value of this column will turn out to be larger than this column.
Remember, in this application, the expected value we’re talking about is a bad thing, because it represents our suffering. So we would definitely be betting against the odds, and against our own rational self-interest to pick this column, because it’s expected value of suffering is greater than this column—probably much greater. Remember, this is how casinos and insurance companies do business. They’ve got it figured out. Why should we ignore such a successful tool when betting on the future of the planet—I mean us?
Now, I want to be completely intellectually honest with you, because stuff like that Heritage Foundation article I mentioned earlier just really ticks me off, and I don’t want to even be accused of bowing to their level. So, to avoid being like them, I want to tell you that for the sake of accessibility, I did a little sleight of hand with the expected value “calculation.”
I don’t see how it could change the conclusion, but then, I’m only human and I could be wrong. And you shouldn’t believe anything I say anyway, but check it out for yourself. Here’s the deal: really, the expected value of a column should be the sum of the expected value of both boxes in that column, and we only looked at the worst-case scenarios in each column. If that simplification doesn’t do it for you, and you want the greater complexity, then go watch the video “How It All Ends: The Manpollo Project.”
[DESK] You may be thinking to yourself “Did he just take 30 minutes to tell me ‘Better safe than sorry?’” Pretty much. Only it’s a bit more well founded, cuz “Better safe than sorry” applies to building a defense system against Giant Mutant Space Hamsters, just in case some attack, and as I hope you’ve seen, this risk management is robust enough to not be slain by that criticism, because we established the credibility of the threat.
Also, I’ve heard the criticism that this is the precautionary principle, which is supposedly self-contradictory (at least according to Michael Crichton and Wikipedia, both well-credentialed philosophers). Regardless of the validity of the precautionary principle, this ain’t it, because this isn’t formulated with the criterion of scientific consensus, but just likelihood of outcome.
If you think it’s self-contradictory and invalid, go tell the casinos that there’s no way they’re going to make any money if they keep giving stuff away all day. I’m sure they’ll appreciate your keen insight.
Before we wrap up this brief [bullsh*t!] exploration of risk management, there are a few loose ends to tie up, most of them objections that I’ve heard about these arguments.
Objection: “I think we’ll innovate ourselves out of any problem. We always have in the past. I mean, we’re still here—right, Mr. Gloomy?” My response is: you don’t base your decision to buy car insurance on optimism, but on a realistic assessment of the worst case scenario. We pay to insure our cars, our homes, our health, without knowing for certain that anything bad is going to happen. Why is it suddenly different here?
As for putting faith in science to get us out of any jams in the future, umm. . . that’s pretty much what the scientists are trying to do right now, but no one’s listening. They’re saying “knock off with carbon emissions, cuz it’s probably going to totally hose us.” I think the only reason we’re still talking about this is that NAS and AAAS don’t have a huge advertising budget to get the word out.
And the exuberant faith that our innovation will magically do whatever we need it to quickly becomes ridiculous. The late Julian Simon, a well-respected economist—and, I’ve read, Bjorn Lomborg’s inspiration for writing The Skeptical Environmentalist—actually wrote “the quantity of copper that will ever be available to us is not finite.”
Wait, if something’s not finite, doesn’t that mean it’s infinite? Is he saying there’s an infinite amount of copper available for us? Is he still reading those alchemy books? Do you think, on a scientific issue, it’s wise to listen to people so clearly ignorant of science?
As for the idea that we shouldn’t get all worked up because—hey—we’ve always managed to avoid global catastrophe in the past, that just reminds me too much about what a good friend of mine in high school used to say. He’d do careless, stupid, things, and when I chided that he should be more careful, he’d say, “I haven’t died yet. So I’m not going to.”
It was a joke. It was funny. He’s dead now, from driving drunk. That’s not funny. That’s deadly serious. Is that really the way we want to decide on public policy that influences everybody on the planet? “We haven’t hosed ourselves yet, so we’re not going to.”
Objection: “That grid is just Pascal’s Wager, which has more holes than Swiss cheese. You can’t put lipstick on that pig.” No, but can I put the pig and cheese on rye? Nah, it looks like Pascal’s Wager because they are both basic decision grids. What sunk his was the infinite payoffs, and assumptions without evidence. This one has finite payoffs, and assumptions based on evidence.
Objection: “Whatever negative economic consequences show up here (pointing at grid) would show up here too, since they’re a function of our action, not of what the physical world ends up doing. So if we choose action, we’re doomed to economic harm.”
My response: remember, the negative economic consequences of the left column are just the worst-case possibilities—they are not guaranteed to happen. So choosing action does NOT doom us to economic harm, or even economic costs. That’s just the worst-case possibility. Watch the video “How It All Ends: Get What You Want” to see how it’s actually quite likely that column A would be a net benefit to the economy.
Anyway, if you think adding the worst-case economic scenario to the bottom left corner would change the expected value of column A compared to column B, that’s a pretty complicated calculation. Actually, it’s a pretty simple calculation, but coming up with the numbers to put into is very complicated. If you want to do that, then go watch the video “How It All Ends: The Manpollo Project.”
Objection: “The upper right corner is the only box that looks attractive. So I choose column B.” My response: hey, that’s fine if you’re playing the tables at Vegas—I think that’s called being risk-seeking rather than risk-averse. But you’re not playing at the tables with your own money. You’re playing with the globe which the rest of us have to live on.
That’s not called risk-seeking or risk-averse. That’s just called being a selfish prick [“jerk”]. Go watch the video “How It All Ends: No Holds Barred” to see why that’s such an embarrassingly ridiculous stance to take.
Objection: “We should be saving up for real threats, like the asteroid Apophis hitting us in 2036. If we’ve squandered our money on the climate change boondoggle, we’ll be too economically crippled to do anything about it.” Okay, that’s just bizarre. And I heard it several times.
You’re going to believe scientists when they talk space rocks, but not when they talk climate science? And if you do believe the space rock scientists, then you haven’t even been paying attention, cuz that asteroid has been taken off the danger list. If that’s your reason for not worrying about climate change, I’m afraid you’ve got bigger problems.
Objection: “It’s not that simple. What about the intermediates between no action and all-out action? What if climate change is happening, but we’re not the ones doing it? What if climate change is happening, and we’re the ones doing it, but our actions don’t stop it? Or they make it worse? You need more column and rows.”
My response: Okay. Let’s talk about that. Take a swing through “How It All Ends: Why There Is Still Debate,” and then I’ll meet you at “How It All Ends: The Manpollo Project,” where we’ll get radical and totally blow this grid up.
For the rest of you, when you look at the statements from AAAS and NAS saying that climate change is a real threat, and at the statements from so many industry and economic sources saying that taking action will probably help—rather than hurt—the economy, doesn’t it start to seem kind of ridiculous that we’re still talking about this? Let’s get going. Forward the video to others. Talk about it to friends and family. Git ‘er done.
http://docs.google.com/Doc?id=dw69vk2_1grchjj
http://docs.google.com/Doc?id=dw69vk2_3f9z7hv
http://docs.google.com/Doc?id=dw69vk2_5fzs8wb
http://docs.google.com/Doc?id=dw69vk2_4dqs3hd
http://docs.google.com/Doc?id=dw69vk2_6ff5d69
http://docs.google.com/Doc?id=dw69vk2_2d5g5cv
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