Gambling with high stakes

2012-04-04

in Economics, Law, Politics, Psychology, Science, The environment

As with other high-risk activities, I think gambling on climate change is irresponsible and reckless, even if the people making that bet turn out to be right.

If a person runs across a minefield in order to experience the thrill of danger, few people are likely to congratulate them for their bold choice in the face of uncertainty. Even if you get away with it, it is foolish to run careless risks, especially when the consequences of getting it wrong are severe. This is why Russian Roulette is commonly regarded as an absurdly irresponsible pastime.

Say there is some powerful negative feedback that climate scientists haven’t yet identified. And say it manages to reduce the severity of climate change substantially. Imagine it is 2100 and we are looking back at 2012. I think the people considering the problem from that vantage would be quite willing to recognize how scary climate change looked in 2012. I also think they would be willing to chastise us for our inactivity on the problem, even in a scenario where it worked out that our most extreme fears for what climate change might mean weren’t recognized. Rather than being concerned about climate change ‘alarmists’ who called for action, I suspect impartial citizens in 2100 would be critical of the people who wanted us to plow heedlessly on with fossil fuel development, despite the serious outstanding questions on what effect that would have on the future of human civilization.

From any rational perspective, it makes sense for the world as a whole to take serious action to reduce the seriousness of climate change and the probability of extremely bad outcomes. The problem is that this course of action is not in the short-term interests of many individuals, including powerful people whose wealth and influence is rooted in the status quo.

The real question, when it comes to climate change, is how to make individuals, companies, and countries behave more like they would if they were taking the rights and welfare of everybody seriously. Something like the Categorical Imperative (or even the Harm Principle) provides the moral backing for this view. The question is how to discourage selfish and destructive behaviour while encouraging the cooperation and sacrifice that are required to protect the planet and discharge our duties with respect to future generations.

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{ 11 comments… read them below or add one }

oleh April 4, 2012 at 12:26 pm

This subject reminds me of the threat that we were prepared to accept regarding nuclear armament from 1945 t0 1990. It was based on some crazy theory of the deterrant being mutual nuclear destruction. Yet countries developing nuclear arms invested heavily for that purpose. We were spending massive amounts of money to destroy ourselves.

Would that be a relevant analogy?

Byron Smith April 4, 2012 at 4:28 pm

By “gambling on climate change”, I assume you mean metaphorically gambling in the sense of continuing business-as-usual in the hope that CC turns out to be a non-problem, rather than actually placing bets on the weather.

Milan April 5, 2012 at 8:32 am

Yes, I mean gambling on the possibility that climate change won’t be so bad, by continuing on a high-carbon pathway.

Milan April 5, 2012 at 8:33 am

Prediction markets of the sort you describe could conceivably be part of climate change adaptation, by allowing farmers and such to hedge against extreme weather.

Byron Smith April 5, 2012 at 10:10 am

Yes, your meaning became clear as the post went on, but for some reason, I had the latter meaning in my head from your opening phrase.

There is another sense in which such predictions (especially when accompanied by bets) have the potential to change minds by highlighting the changes occurring and the ability of climate science to anticipate them (at least some of the time). I’m thinking of Joe Romm’s bets with deniers on Arctic sea ice decline and similar. However, using this as a persuasion method is itself a kind of gamble, since such bets can backfire due to natural variability (if the timeframe chosen is too short) or due to inadequacies in the climate projections (including Black Swan events and non-linear system responses). Nonetheless, such bets do usefully highlight various ways of conceiving risk and bring into the open the kinds of odds we believe certain events to have. They also help to flush out deniers who don’t really believe what they are saying and who are not willing to put their money where their mouth is. Of course, such “bets” are happening all the time in the market when people are determining the appropriate price for low-lying property, or the value of shares in oil companies and so on, though these are often obscured through the inclusion of many other considerations (for instance, if you were thinking purely selfishly and accepted the likelihood of disastrous climate change and a subsequent major backlash against the fossil fuel industry, you might still believe this to be far enough off and that political inertia is such that fossil fuel companies are likely to continue to get special treatment from governments and so accept the short-term profitability of continuing to invest in them).

Milan April 6, 2012 at 1:38 pm

Similarly, the insurance industry will probably be a good source of information on the severity of climate change effects as they unfold.

Byron Smith April 11, 2012 at 12:58 pm

In case you hadn’t already seen it, I thought you might be interested in this Bill McKibben interview, particularly the final couple of paragraphs where he explicitly picks up on the language of gambling.

Milan April 12, 2012 at 8:35 am

Another related idea is attributed to Richard Sandor in Daniel Yergin’s The Quest. Yergin claims that after attending the 1992 Rio Earth Summit, Sandor was convinced that action should be taken on climate change because of an argument about “the gambler’s ruin”. He said: “No matter how good the odds, never make a bet that could ruin you if it goes against you. Why take the risks on climate change if it could end in catastrophe?” (p.495 hardcover)

Byron Smith April 12, 2012 at 1:17 pm

Is that really any different to Pascal’s wager?

Anon April 12, 2012 at 2:41 pm

Pascal’s Wager is a risky bet, because you are unlikely to choose the correct God.

Most religious texts are clear on the point that it is better to worship NO God than to worship the WRONG one. For instance: “I the LORD thy God am a jealous God, visiting the iniquity of the fathers upon the children unto the third and fourth generation of them that hate me”

. April 17, 2012 at 10:21 pm

One who was certainly convinced [by the evidence supporting climate change] was John Browne, then the chief executive of BP. Much influenced by the IPCC reports, Browne decided that BP should taker climate change seriously and act on it. In May 1997 he delivered a speech at Stanford University. “It would be unwise and potentially dangerous to ignore the mounting concern,” he said. “We must now focus on what can and should be done, not because we can be certain climate change is happening, but because the possibility cannot be ignored.”

Yergin, Daniel. The Quest: Energy, Security, and the Remaking of the Modern World. p.498

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