There were a lot of comments to Friday's post, in which I shared U. Penn risk assessment specialist Adam Finkel's critique of a particularly bad Robert Samuelson column in Newsweek. Now, Finkel has come back and responded in detail to all of your comments. Check it out. A very brief excerpt:
Unfortunately, economists have a HUGE problem thinking adequately about uncertainty in cost, and they tend to "solve" it by ignoring it. On a good day, they can tell us something about how much money is needed to drive the "partial equilibrium" phase of a regulatory program--the one in which some people have to give up something to provide the environmental or other benefits. The polluters may have to purchase control technology, the consumers may have to absorb higher prices for some goods. But that's not what "cost" is. The cost of a social program is the sum of all the changes in economic welfare impelled by the program, including the changes to the producers of the control measures themselves, the employees who work for them, the people who buy goods whose prices go down because of the program, etc., etc. We simply have no idea whether the "general equilibrium" post-mitigation is less "tremendous" than the partial one, is even worse, or is all the way through the looking glass to a true "win-win" outcome (where we save the climate and also improve the economy over its current state). Another amateur scientist/economist on Newsweek's payroll is the inimitable George Will, who wrote Samuelson's column six months before Samuelson did. Will mused about the possible joys of agriculture in Greenland, and asked a legitimate half-question: "Are we sure the climate at this particular moment is exactly right, and that it must be preserved, no matter the cost?" If economists would ask, and help us answer, the more interesting half of the question--"Are we so sure the economy at this particular moment is exactly right, and that it must be preserved, no matter the cost?"--we might actually understand something about what we might lose, and gain, by taking the steps Samuelson says, with no foundation, are "too difficult."
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