Monday, August 30, 2010

Steven Levitt & Stephen Dubner's "Superfreakonomics"

This book was far better than I was led to believe by reviews. The reviews made it seem that this book took outrageously ideological views, unacceptable views, and flaunted common sense and decency. That just isn't true. They made it sound like the authors were fanatical climate change deniers. They aren't. It made them out as some kind of grotesque "engineer the earth at whatever cost" crazies. They aren't.

To get a taste of the book:
... Myhrvold fears that even IV's [Intellectual Ventures] gentlest proposals will find little favor within certain environmentalist circles. To him, this doesn't compute.

"If you believe that the scary stories could be true, or even possible, then you should also admit that relying only on reducing carbon dioxide emissions is not a very good answer," he says. In other words: it's illogical to believe in a carbon-induced warming apocalypse and believe that such an apocalypse can be averted simply by curtailing new carbon emissions. "The scary scenarios could occur even if we make herculean efforts to reduce our emissions, in which case, the only real answer is geoengineering."

Al Gore, meanwhile, counters with his own logic. "If we don't know enough to stop putting 70 million tons of global-warming pollution into the atmosphere every day," he says, "how in God's name can we know enough to precisely counteract that?"

But if you think like a cold-blooded economist instead of a warm-hearted humanist, Gore's reasoning doesn't track. It's not that we don't know how to stop polluting the atmosphere. We don't want to stop, or aren't willing to pay the price.

Most pollution, remember, is a negative externality of our consumption. As had as engineering or physics may be, getting human beings to change their behavior is probably harder. At present, the rewwards for limiting consumption are weak, as are the penalties for overconsuming. Gore and other environmentalists are pleading for humankind to consume less and therefore pollute less, and that is a noble invitation. But as incentives go, it's not a very strong one.
Let me translate for you: Gore is the Jimmy Swaggart of environmentalists. He has no problem preaching at you, but he hasn't cut his carbon footprint (he owns to very large mansions and runs floodlights to make sure his neighbors are aware of these imposing structures). He wants you to do as he says, not as he does. He, like most of the global warming industry, thinks nothing of jet-setting around the world to tell others to cut carbon emissions. What Levitt and Dubner point out: economics allows you to understand that you won't change human behaviour with preaching. You need to change the incentives. People respond to incentives.

I found this book to be a worthy successor of its predecessor, Freakonomics. It includes many, many insightful examples from economics to help you understand many aspects of life that you wouldn't think of as the normal subject matter of economics. The book is delightful. It is an eye-opener. It is well worth reading.

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