Results for “climate change”
361 found

The finite pool of worry

These rents are more than exhausted:

According to Weber’s psychological theory of the finite pool of worry, people avoid dealing with multiple negative events at the same time. Consistent with this theory, as people worry more about the COVID-19 pandemic, they tend to neglect the problem of climate change. Here, we examine the number and content of climate change discussions on Twitter from 2019 through 2021. We show that as COVID-19 cases and deaths increase, climate change tweets have a less negative sentiment. There is also less content associated with fear and anger, the emotions related to worry and anxiety. These results support the finite pool of worry hypothesis and imply that the pandemic redirects public attention from the important problem of climate change mitigation.

Here is the full article, via tekl.  Perhaps I could induce you to worry about the finite pool of worry?

Friday assorted links

1. One painting from every year of the 19th century.

2. The FT on AI-generated art.  I genuinely find I don’t know how good an artwork is until I learn much about about it.  This is one of the major obstacles standing in the way of AI-generated art.  “A good image” is in fact not nearly enough.

3. “Today’s Older Adults Are Cognitively Fitter Than Older Adults Were 20 Years Ago, but When and How They Decline Is No Different Than in the Past.

4. Mondrian painting has been hanging upside down for 75 years.  (I enjoyed the new Mondrian biography by the way.  Mondrian is one of my heroes.)

5. David Brooks on rising emotional inequality (NYT).

6. Bret Stephens revising his views on climate change (NYT).

A simple explainer on global warming positions

Here is Chris Hayes calling for lower gas prices, here is the White House.  I do understand the median voter theorem!

But let me explain how a lot of the Right wing sees this issue.  They believe the Left was never entirely serious about the climate change crusade in the first place, but wanted to use it to achieve certain political goals.  “Why go along with this charade if the Left is going to pull the plug on the effort anyway?”  A lot of the Right is less naive about climate change than you might think.  They won’t come out and say all this, but they also think the Left is at least as dishonest about the issue, albeit in a more self-deceiving, ostensibly more sincere fashion.  The Right sees messages like this and then they feel “Ah, we were right!”.

To be clear, I believe that economists should present good policies to internalize externalities in simple, straightforward non-Straussian fashion.  Someone has to!  So we ought to stay the course.

But if you are trying to understand the debate, and why it is not as morally one-sided as you might think, I find this a useful framework.

Investment advice from Russell Napier

First of all: avoid government bonds. Investors in government debt are the ones who will be robbed slowly. Within equities, there are sectors that will do very well. The great problems we have – energy, climate change, defence, inequality, our dependence on production from China – will all be solved by massive investment. This capex boom could last for a long time. Companies that are geared to this renaissance of capital spending will do well. Gold will do well once people realise that inflation won’t come down to pre-2020 levels but will settle between 4 and 6%. The disappointing performance of gold this year is somewhat clouded by the strong dollar. In yen, euro or sterling, gold has done pretty well already.

Here is the full discussion, interesting throughout.  He also says to expect widespread capital controls.  To be clear, none of this is investment advice from me.

Monday assorted links

1. Rain as an instrumental variable.

2. With and without digital transmission.  #chessdrama

3. What is wrong with the Russian military?

4. Is climate change priced into bond risk?

5. “…tech firms hired one in seven newly minted PhDs [from ten leading economics graduate programmes in the US] in 2022, up from less than one in 20 in 2018…”  Link here.

6. Why is Ukraine right now making net transfers to the IMF?

7. AI allows dead woman to answer questions at her funeral.

2022 as the year of AI?

That is the topic of my latest Bloomberg column, here is one excerpt:

But the benefits of AI do not accrue only to those in the technology sector. AI makes many goods and services cheaper, and that in turn benefits the poor and disadvantaged. If software routes packages and shipments more efficiently, then transportation costs will be lower. If software and AI programs help economize on the use of electricity, then it will be easier to mitigate climate change. As computational biology improves health care, the sick will benefit.

The people who least need AI are the super-rich. They already can hire armies of servants to manage their obligations, schedules, and so on. They do not need to economize on the use of human labor. The rest of us do, whether directly or indirectly through the businesses we patronize.

Another benefit for lower-income groups is that current manifestations of AI do not usually displace the jobs of the poor. Many poor individuals hold jobs in the service sector or perform manual labor. Those tasks are either hard to automate (a robot gardener?) or, because wages are low, less profitable to automate.

It may be true that the costs of AI in the labor force — displaced jobs — are more visible than the benefits of AI — new jobs and lower prices. So it’s not surprising if AI is not entirely popular.

Recommended.

Locus of Control and Prosocial Behavior

We investigate how locus of control beliefs – the extent to which individuals attribute control over events in their life to themselves as opposed to outside factors – affect prosocial behavior and the private provision of public goods. We begin by developing a conceptual framework showing how locus of control beliefs serve as a weight placed on the returns from one’s own contributions (impure altruism) and others contributions (pure altruism). Using multiple data sets from Germany and the U.S., we show that individuals who relate consequences to their own behavior are more likely to contribute to climate change mitigation, to donate money and in-kind gifts to charitable causes, to share money with others, to cast a vote in parliamentary elections, and to donate blood. Our results provide comprehensive evidence that locus of control beliefs affect prosocial behavior.

Here is the full paper by Mark A. Andor, et.al.  It is always worth asking which political philosophies encourage such locus of control beliefs, and which do not.  That will tell you more than almost any other metric.  Wouldn’t it be nice if people would wear little buttons — “My philosophy does not encourage locus of control beliefs” — how simple life would be!

One reason why a global carbon tax is impossible

Consequently, from a regional perspective, there are large disagreements about the welfare effects of carbon taxes: when a uniform carbon tax is imposed across all regions, with revenues redistributed locally as a lump sum so that there are no interregional transfers, some regions gain and others lose, often by large amounts that swamp the globally-averaged benefits of carbon taxes.

The microfoundations of that claim are interesting:

At the regional level, the optimal annual average temperature (at which the calibrated inverse U -shape governing how labor productivity varies with temperature reaches its peak) is approximately 12 degrees Celsius (C); an increase of regional temperature from 10 C to 12 C increases a region’s total factor productivity (TFP) by about 1%, while a further increase in annual average temperature from 12 C to 14 C reduces its TFP by about 2%.

Here are some bottom-line numbers on the global costs of climate change, with and without a carbon tax regime:

Without taxes global GDP reaches its nadir (relative to trend) just after 2190, when it is about 7.3% below the trend that would have obtained starting in 1990 without further global warming. With taxes, global GDP reaches its nadir just before 2190, at about 5.5% below trend.

Again, the costs of climate change are a few years of global economic growth.  That is a big deal, and worth attending to, but far from an existential risk.

Here is the 160 pp. NBER working paper by Per Krusell and Anthony A. Smith Jr.

Are the electric vehicle subsidies too mercantilist?

That is the topic of my latest Bloomberg column, here is one part:

The bill also has mercantilist elements, which are not ideal from a climate standpoint. The subsidies apply to North American vehicles only, and the battery components must be increasingly American over time, not allowing Chinese components. So to the extent the policy is effective, it will slant the market in the direction of American products.

That is hardly a surprising feature of US legislation. Still, US producers may not be best situated to solve the problem of affordable, scalable electric vehicles. Is it so smart to push the critical growth in electric vehicle production into a relatively high-wage market?

Some commentators have suggested that Korean automakers Hyundai and Kia will be the leaders in electric vehicle production. But they may see their biggest innovation and productivity gains outside of North America, possibly in Europe or India.

Keep in mind that climate change is a global problem; cutting back on US emissions will do only so much. This legislation could well lead to lower emissions in the US but make them marginally harder to achieve in the rest of the world, thereby reducing its effectiveness.

It is no mystery why American legislation would have provisions that subsidize American consumers and businesses. But political expediency is an explanation, not an excuse. Climate change is a global problem that demands global solutions.

Much of the rest of the column considers whether the subsidy will lead to a higher quantity of electric vehicles produced, or simply a higher price (it depends, as usual!).

Science as a source of social alpha

How to improve society is one of the most commonly discussed questions, but it is not always approached with sufficient seriousness. We don’t think analytically enough about which variables can have maximum impact and also which are most feasible to steer.

For instance, the management of science is a radically underappreciated issue. How many managers of scientific labs receive any management training at all, even in the basics? On a scale of 1 to 10, how well are most labs or non-profit scientific ventures run? I’ve asked a number of people in the hard and biological sciences this question, and more often a laugh is the response, rather than a citation of a very specific number. I’ve never heard anyone say they are run just great.

On the other side of the market, the rest of us are failing too. In our social discourse, we have not elevated better scientific management as a social priority. This could be done in our universities, non-profits, research labs, government agencies, and of course in the private sector too. It’s not a sexy policy issue, but science is one of the most significant means for improving society. In the language of finance, you could say that science is a major source of social alpha.

Science offers the added benefit of being relatively easy to influence or control. Trying to improve the management and policy of U.S. science isn’t an easy task, but it is a relatively small part of our economy and the notion of science is relatively well-defined. Furthermore, our government has many direct policy levers such as the National Science Foundation, the National Institutes of Health, the Department of Energy, and the Department of Defense, not to mention numerous state universities. If we can’t improve the performance of our science, you have to wonder what can we do.

In contrast, some other sources of society-wide superior performance are broad and far-ranging in nature, but often too difficult to steer. I have in mind such variables as “trust,” or “having a cooperative culture.” Those are strong positives for societies, but also a little intimidating for a policy program and they can be very difficult to pin down.

Is science really a source of social alpha? Well, science gave the world mRNA vaccines, though not to all societies at the same time. The U.S. and UK cashed in early there, in large part due to their domestic scientific achievements. Science helps keep the U.S. defense establishment strong. Superior science also was essential to the building of the United States as a wealthy, developed nation. If you are hoping that we cure cancer, or limit the problems of climate change, those issues too rely on science. Most generally, science feeds into productivity growth which in turns boosts real wages and the general opportunities available in society.

Science policy could take up a much larger “mind space” in current policy debates. American science was mobilized in part due to the panic over the 1957 Sputnik scare, when the Soviet Union seemed to be ahead of the United States in a number of scientific dimensions. We don’t have a comparably focused scare today, but today’s problems are in fact no less urgent.

The institutions of the National Institutes of Health, the National Science Foundation, the Department of Defense and more all have very specific policies toward science. I do not have all or even most of the answers, but what are the chances that those institutions have the very best policies toward science? Pretty close to zero. And as time passes, those institutions seem to become more bureaucratic, more concerned with process, and less innovative, hardly a surprising evolution to anyone familiar with Washington, D.C.

I think we should experiment more with DARPA-like models, where rotating program managers, operating in relatively flat bureaucratic structures, have the autonomy to commit significant sums of money. I also think in pandemics our science institutions should have wartime-like powers to act more quickly and decisively. Whether or not those particular views are correct, a sustained national dialogue about science could yield substantial dividends.

On the research side, science policy and the study of science, should be far more prominent. In my own field, economics, economics of science is barely a subfield and it probably accounts for less than one percent of all research. In my ideal world, it would account for at least five percent of all of economic research.

Similarly, the history of science has produced thousands of wonderful books and articles, but it is hardly the highest-status or most popular subfield in history. We can appreciate what is there while wishing for much, much more, not just in terms of numerical outputs but also in terms of social status and reach to a broader set of readers.

Better science is one of the biggest “free lunches” standing before us.

What exactly is the problem these days?

In my latest Bloomberg column I tried to express the “model” in as few dimensions as possible.  Here is an excerpt:

I am increasingly worried that human success and failure are ruled by taste — the demand side, in economic terms. If there are fewer beautiful and charming residential post-World War II neighborhoods, it is because most people do not want to live in them. If there are fewer movies today with the dramatic impact and compositional rigor of “Citizen Kane,” it is because people do not very much want to see them. It is not that it is too difficult or expensive to make another “Citizen Kane.”

Again, this is not an argument for pessimism. Hollywood movies may be worse, but television programs are much better. Neighborhoods may look less interesting, but the insides of homes are more comfortable. For every potential lost Baroque concerto, there are gains in other areas of life.

Still, it is striking how much the quality of taste can decline — and stay there for long periods.

Social contagion plays a significant role in this process. That is, when some people become interested in a particular genre, many others may follow: Think of the rise of Beatlemania. The process also works the other way: Think of the decline of disco.

The question is why some particular tastes decline, and others rise. There are probably deep structural explanations, but for the most part those reasons are not transparent to our understanding. For all practical purposes, many shifts in cultural tastes are random.

It’s also important to realize that a lot of politics is about aesthetic tastes for a particular set of values, a particular set of people, a particular set of processes and outcomes. There was a series of democratic revolutions starting in the late 18th century, just as there were numerous fascist revolutions starting in the early 20th century and neoliberal revolutions in the 1990s. Social contagion can help explain those as well.

My fear, quite simply, is that we have entered an age in which the popular taste for good political outcomes, and fair political processes, is much weaker than it used to be. You might think that people would always want at least decent political outcomes, but that hypothesis has gotten increasingly hard to defend in the last 10 years, both in the US and globally. Attachment to democracy, for instance, seems significantly weaker, as does love for capitalism. People’s tastes are being pulled in different directions, whether it be the Proud Boys or the extremely woke.

All of which is to say, a rather simple and unglorified possibility is becoming more likely: People have stopped wanting good things to happen.

I realize this explanation is banal and does not hold much emotional appeal. Many people prefer conspiracy theories, or tightly structured theoretical hypotheses, or to pin the blame on some particular political faction, usually one they oppose. Or they focus on some very specific issue, such as climate change.

I view all of those problems, real though they may be, as downstream from the more fundamental issue: Why haven’t our systems of government responded better to whatever particular dilemmas concern us most?

Happy 4th!

Monday assorted links

1. Vitalik on when blockchains make sense (or not).

2. Ezra Klein on why NYC is taking so long on congestion pricing (NYT).

3. How climate change communications can backfire.

4. “Dustin Hoffman is only five years younger than Anne Bancroft, who played probably the most famous older woman in history in The Graduate.

5. The daunting economics of mRNA vaccines.

6. If monetary policy determined asset prices.

That was then, this is now, cryptocurrency edition

Nouriel Roubini, a blockchain basher who famously called Bitcoin “the mother of all bubbles,” is working to develop a suite of financial products including a tokenized asset intended to act as a “more resilient dollar” in the face of higher inflation, climate change and civil unrest.

Roubini, nicknamed “Dr. Doom” for his bearish views, sees room for an asset-backed digital coin that could help protect against higher prices and benefit from soaring demand for land and commodities, as well as a loss of confidence in fiat currencies. He’s working with Dubai-based Atlas Capital Team LP, which he joined two years ago as co-founder and chief economist, to create the new products.

In doing so, Roubini is tapping into growing concerns over the pace of inflation as well as speculation about the longer-term outlook for the dollar, with prominent financial voices including Bridgewater Associates LP’s Ray Dalio and Credit Suisse AG strategist Zoltan Pozsar having argued the U.S. currency risks gradually losing its reserve status.

The greenback’s lofty position could be in jeopardy as the U.S. “prints too much money and adversaries start de-dollarizing,” Roubini said in an interview. “We recognized that America’s dollar reserve currency could be at risk and are working to create a new instrument that’s effectively a more resilient dollar.”

Unlike many cryptocurrencies, Roubini stresses that the coin would be backed by real assets — a mix of short-term U.S. Treasuries, gold and U.S. property (in the form of Real Estate Investment Trusts, or Reits) that’s expected to be less affected by climate change.

Here is more from Bloomberg.  Here are earlier writings of relevance.  I’m all for new business ventures, but perhaps he has the inflation timing wrong on this one?  In any case, welcome Nouriel to the Austrian School of Economics!