I don't find this post at Climate Progress helpful at all

Joe Romm unfairly disses Rob Stavins on his "cooking dinner in the shower" quote:

One of my New Year’s resolutions is to blog more about the general lameness of the economics profession when it comes to energy and climate issues ...

In short, whatever we do to address climate must not attempt to create jobs. And whatever we do to create jobs should make no effort whatsoever to get off our self-destructively unsustainable economic path. That would not be a Pareto optimum, I guess.

Seriously, Dr. Stavins, just because you haven’t figured out how to walk and chew gum at the same time, doesn’t mean nobody else can.

...

I know it is hopeless ask the media and policymakers to stop listening to economists, but if anyone can tell me of any intelligent thing a major economist has recently said on energy or climate other than Weitzman — (see Harvard economist disses most climate cost-benefit analyses) — or Stern (see Stern admits report “badly underestimated” climate change risks), I’ll cook them a soggy dinner.

All kidding aside, I think the economics profession’s misunderstanding of climate science and its misapplication of cost-benefit analysis are among the single biggest impediments to serious and intelligent efforts to avoid humanity’s self-destruction. I will lay that out in future posts.

Economists are right in there trying to figure out the best way to deal with climate change. We have tools that might help. Agree or disagree with us, but silly insults don't help keep the conversation going. I guess we'll wait and read more attacks on economics in future posts at Climate Progress.

And, by the way, scientists in all disciplines have gotten things wrong. The most difficult thing economists try to understand is the aggregate outcome of trillions of decisions made by billions of people. That is a tough task. Non-economists should try it professionally for awhile. It is relatively easy to point out mistakes and broadbrush an entire profession.

And, another by the way, walking and chewing gum at the same time are much easier dual activities than cooking dinner in the shower. My guess is that Rob CAN, in fact, walk and chew gum at the same time. Stimulating a macroeconomy and cleaning the environment are both difficult things to do by themselves. Trying to do both at once is like, well, trying to cook dinner in the shower.

Comments

[odograph]

Well, how do you think economists have responded to the "tipping point problem."

The atmospheric sciences tell us that it is a possibility, but generally economists seem slow to consider it ... simply because discussions of incremental costs and benefits at the margin are easier.

If the economic framework causes us to exclude real world possibilities, and to focus only on a subset possible outcomes, yeah it becomes an impediment.

[odograph]

Shorter: I think economics is a good, though fuzzy, tool for understanding our human nature. The push-back (or justified backlash) happens when this fuzzy tool is over-applied, or applied with excess confidence.

[David Zetland]

I can chew gum in the shower, but I can't walk and cook. What's that make me?

[Scott]

Sorry you are insulted but frankly, having followed this blog for some time, I agree with Joe Romm. Most of what I see here is looks an awful lot like a myopic misapplication of analysis that over-simplifies reality to such degree as to be counter productive. The "Green-Jobs-Are-Bogus" meme is a perfect example of this type of clap-trap.

Climate Scientists, who are the only ones qualified, have most definitely NOT gotten it wrong. That kind of claim may comfort you, but its BS. They have been ignored for far too long, on the order of 5o years now, but they did not get the science wrong.

By the way, the best way to cook dinner while showering is with a crockpot, or if you an economist, a crackpot ;-).

[Scott]

Let me put it another way. Climate scientists understand climate change better that economists understand the economy.

[Joseph Romm (ClimateProgress)]

Rather surprisingly, you have failed to articulate any evidence that my criticism of Stavins' position -- or his absurd analogy -- constitutes unfair dissing.

Let me quote from one of the comments to my post:

Dr. Stavins is referring to the ‘Tinbergen rule’, which says that one policy instrument should address only one policy goal; and that the policy maker should have as many single instruments as there are goals; so if a carbon tax has undesired effects for poor people - or increasing the government share of GNP, there need to be other policy instruments to correct these outcomes (for example, a program to weatherize homes, or a reduction in other taxes).
Tinbergens’s rule is usually invoked wrongly when an economist or politician doesn’t like a policy proposal.
Tinbergen’s rule is a (for most purposes over-) simplified version of Ashby’s Law, which states that only complexity can absorb complexity; that means that the policy mix must be able to handle the problems at hand (using complexity filters and amplifiers). Few economists ever heard of Ashby’s laws, because the maximum complexity conventionally trained economists are expected to handle can be computed in two-by-two two-dimensional matrix ;-), or whatever fits their respective ideologies. (I am an economist myself.)
Tinbergen’s rule is often bogus: If a tax is levied, it raises revenues AND it makes more expensive whatever is taxed (labor in the case of income and payroll taxes; energy or CO2 emissions in the case of carbon taxes.) So any policy instrument does what it does, and that is its purpose (The purpose of a system is what it does, not what its proponents tell you what it should be doing.)
BTW, it’s quite unclear that the poor would be hit the most by energy tax increases; the rich generally consume way more resources than the poor and would thus bear a higher burden of energy taxes. It’s empirically clear that energy subsidies in the US, in China or India go overwhelmingly to the well-off. Conversely, an energy (or CO2) levy would fall mostly on the rich.
The idea that energy taxes are regressive reminds me of the poor old widow who cannot write to her grand children anymore because of a postal rate increase (as we are told by the banks and insurance companies and other mass mailers.)

So if you want to give a dinner party and enjoy it while clean, it’s most efficient and optimal in any way if you have two instruments: cooking in the kitchen, and taking a shower in the bathroom. If you come in a time-constraint (you now have a third variable that you must control) you must have a third instrument; a chef, a catering service, for example, or a telephone to tell your guests to arrive 23 minutes late. Too easy for an economist to understand (or for a journalist to report)?

[Patrick]

"In short, whatever we do to address climate must not attempt to create jobs."

This seems unfair. I thought the green-jobs-are-bogus side's claim was that "don't tout green jobs to be a benefit of policy when they clearly fall under costs"?

[rich]

joseph,

your commenter says "BTW, it’s quite unclear that the poor would be hit the most by energy tax increases; the rich generally consume way more resources than the poor and would thus bear a higher burden of energy taxes."

we actually estimate this and find that energy price increase are in fact regressive, as expected:

http://www.rff.org/Publications/Pages/PublicationDetails.aspx?PublicationID=20545

also, joseph, you write:
"Uhh, Elizabeth, every major climate proposal rebates money back to low-income people. "

Which major Climate Bills are you referring to? I don't remember rebates to low income households being in L-W, B-S, or L-M.

[Lonewolf]

Scott,

The environmental economists at this blog, and I'd say many, if not most, environmental economists, don't doubt what climate scientists say.

On the green-jobs-are-bogus simplification: Most any micro policy will be ineffective in "creating jobs." For historical example, consider NAFTA. Those for touted millions of new jobs. Those against anguished about millions of lost jobs. In the end, the net effect was a very small change in the overall number of jobs.

The green job issue is the same thing. Oversimplication? Maybe. "myopic misapplication"? I don't think so.

The bottom line is that "jobs" are the wrong way of measuring the effect of microeconomic government policies.

[John Whitehead]

Joseph Romm,

While you are here, in response to this:

Who else could a respectable journalist turn to than an economist, a profession that arguably has cost the country and the world more jobs than any other?

I'd argue that the economics profession, by pushing the idea of free markets since Adam Smith has helped create positive net jobs. If you take all of those lost jobs that bad economic advice has cost the world and subtract them from the increased jobs that good economic advice has gained, I'd bet we'd be in the black.

[odograph]

I'd argue that the economics profession, by pushing the idea of free markets since Adam Smith has helped create positive net jobs. If you take all of those lost jobs that bad economic advice has cost the world and subtract them from the increased jobs that good economic advice has gained, I'd bet we'd be in the black.

I especially liked when they invented the transistor and penicillin.. no, wait ... economists were more observers to things like that.

(Adam Smith correctly called out the folly of princes, but Nassim Taleb is not totally wrong when he calls out the folly of economists.)

If anything, we have human foibles that are amplified in some situations (and by some disciplines) rather than muted.

[John Whitehead]

Joseph Romm,

you have failed to articulate any evidence that my criticism of Stavins' position -- or his absurd analogy -- constitutes unfair dissing

Your dissing was unfair because you offered no evidence that his analogy is incorrect. And the only criticism of Stavins' position that you offered was the absurd paragraph that led to your suggestion to bring him deodorant instead of wine to a dinner party.

Tinbergens’s rule is usually invoked wrongly when an economist or politician doesn’t like a policy proposal.

Unless you have evidence that Stavins' (or myself) doesn't "like a policy proposal" (in the preferences sense, as in, I don't like tofu) I don't know how you can say this. I argue against "green jobs as fiscal policy" because I think fiscal policy should not be constrained by environmental policy and vice versa. I think they would both work better without these constraints.

While some policies can accomplish two goals, many cannot, or don't do a very good job. The Pigouvian tax is a good example of not always doing a good job of raising revenue but a great job of reducing negative externalities. A nice sized gasoline tax will reduce the number of miles driven and increase fuel efficiency, but if the transportation departments road budget relies on this tax revenue they will begin to fall short at exactly the same time that the tax is doing a great job correcting the negative externality.

[John Whitehead]

Odo,

Thanks for your comment but I specifically said: "by pushing the idea of free markets" and never once overstated the contributions of the economics profession into the areas of science and medicine.

[John Whitehead]

Scott,

Climate scientists understand climate change better that economists understand the economy.

OK. But, I don't really understand why this is relevant. I would say that economists understand the economy better than most others.

[John Whitehead]

Also quoting from the Climate Progress comments section in response to economists who don't think there is a free lunch!

i think what the miserly economists object to is exactly that… if we could make a miracle switch while reducing labor “costs” they’d get whole-body forest tattoos and walk arouund naked…

The secret is out!

[Mark Shapiro]

I am a faithful reader of ClimateProgress, new to env-econ, and I would like to be helpful.

Economists (especially here in Chicago) love to invoke the Coase theorem, which instructs us that, in cases of low transaction costs and well-defined property rights, the parties (usually two neighbors), an economically efficient result will be achieved. (Is that about right?)

In the case of man-made global warming, the number of transactions alone is about 6 billion factorial -- a (very, very) large number. Heck, the information costs alone are overwhelming (among other things, it's impossible to do controlled, repeatable experiments on your one and only Planet's climate).

So if anything, Coase helps us to understanding the enormity of the problem. Explaining that carbon taxes are (generally) more efficient than command and control breaks down a little here.

Maybe behavioral economics -- finding ways to encourage faster uptake of conservation, efficiency, and renewables -- might help.

(Please stop me if you've been through all this before and have a solution in hand.)

[Tim Haab]

Mark,

Welcome.

Now which part of that is supposed to be helpful?

Tim

[Mark Shapiro]

Tim - ok, clearly I need to read first, write later.

Two themes I'm struggling with are:

1 - How economists understand (and misunderstand) AGW. I think applying Coase theorem obscures more than it reveals about the economics of AGW. OTOH I appreciate the work of Weitzman, Stern, and even Posner, who all appreciate the possibility and cost of disaster (e.g. in long tails of probability distributions).

2 - Defining how AGW is new and unique in human experience: physically, politically, economically, legally, morally, psychologically. It is global (actually planetary), invisible, well camouflaged by normal climate variability, involves everyone collectively all the time (as both perpetrator and victim to varying extents), intergenerational, and yet not only completely legal but actively encouraged and well subsidized.

It is the only long distance, very long-fused, completely impersonal, randomly imposed, non-actionable "taking" I can imagine.

How am I doing?

[Scott]

"OK. But, I don't really understand why this is relevant. I would say that economists understand the economy better than most others. "

It is a response to this: "And, by the way, scientists in all disciplines have gotten things wrong.", which I may have misread as a claim that everybody got climate change wrong. On rereading I think I misunderstood at first.

By the way I agree with the balance of the paragraph, which points out that the dismal science ;-) is also one of the most difficult, and I would add to that, therefore one of the most suspect.

[John Whitehead]

Scott,

And, by the way, scientists in all disciplines have gotten things wrong.

I respect that scientists in any discipline are doing the best they can to understand what they study. Mistakes are made because understanding the world in which we live is a difficult thing. Discussion point: Is there a heaven and/or hell?

What I don't respect much is scientists dissing other disciplines. That includes economists who diss climate scientists and climate scientists who diss economists. Unless you are trained in a discipline in a somewhat serious and advanced way and try to work it out every freakin' day there is some basic misunderstanding about the literature or methods or "ideology" or data limitations or scope or something else about the discipline outside your field. Those outside the field should begin a critique of that field with that understanding. "Getting things wrong" is the weakest, hindsight is 20-20 critique.

Unless you are a genius.

I have little patience with non-economist economics bashing.

[John Whitehead]

Mark,

Very few environmental economists take the Coase theorem very seriously.

[Mark Shapiro]

John - thanks for the note; I'll stop worrying it. By his own admission it is limited (basically to next-door neighbors, it seems).

AGW is completely different.

[odograph]

What I don't respect much is scientists dissing other disciplines. That includes economists who diss climate scientists and climate scientists who diss economists.

I like a lot of economics, but let's remember:

This is a discipline that splits 50:50 on whether taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression.

With fundamental disagreements like that, this is not hard science.

[Tim Haab]

Odo,

That's quite possibly the most ridiculous comment you've made here. Does that mean that biology is not hard science because biologists disagree on the exact mechanism for evolution?

I (and I would venture to guess John) do not claim economics as a hard science. But I would venture to say it is one of the harder social sciences.

But even with that admission, pointing out that there are different schools of thought for explaining a highly complex event as evidence that something is not a science is laughable.

[odograph]

It's not just me, Tim. See also:

The Economic Crisis and the Crisis in Economics

(I think "exact mechanism for evolution" is a mis-comparison. This is more akin to redebating Darwin ad-infinitum.)

On a serious level though, I recognize that economics is a diverse community, and that while there have been some with both grand claims and dangerous advice, that isn't everyone. The smart people (who understand uncertainty and limits to knowledge) stay off financial television, to put it in a nutshell.