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Thomas Schelling in action
1. Steve Levitt on Thomas Schelling
2. Thomas Schelling on global warming and uncertainty
3. Thomas Schelling in Iran, photos and a funny translation
Posted by Tyler Cowen on January 22, 2008 at 10:49 AM in Economics | Permalink
Comments
Schelling, writing on global warming, discusses various strategies for dealing with uncertain risks. He says, "Neither of these two principles makes sense, economically or otherwise."
However, he has just discussed three, not two, principles: the Bush administration position that the uncertainty of global warming makes action unwise; the "insurance" principle that anticipatory action is justified in the face of risk; and the precautionary principle, which requires guaranteed safety of a new technology before it is allowed, even in the face of expected benefits.
Do you think he meant that none of these three principles makes sense? Or is one of them OK, and he only means to criticize the other two? If so, which one of them is OK?
Posted by: Hal at Jan 25, 2008 11:16:34 AM
Schelling writes:
For some, particularly the Bush administration, uncertainty regarding global warming appears to be a legitimate basis for postponing action, which is usually identified as “costly.” But this idea is almost unique to climate change. In other areas of public policy, such as terrorism, nuclear proliferation, inflation, or vaccination, an “insurance” principle seems to prevail: if there is a sufficient likelihood of significant damage, we take some measured anticipatory action.
At the opposite extreme is what is often called the “precautionary” principle, now popular in the European Union: until something – for example, genetically modified foods – is guaranteed safe, it must be postponed indefinitely, despite substantial expected benefits.
Neither of these two principles makes sense, economically or otherwise. We should weigh the costs, benefits, and probabilities as best as possible, and not be obsessed with extreme cases.
I think it is fairly clear that the "two principles" that Schelling is criticizing are 1) the idea that "uncertainty ... appears to be a legitimate basis for postponing action" and 2) the idea that "until something ... is guaranteed safe, it must be postponed indefinitely."
In fact, he seems to be slyly saying that, in a very important sense, the principles are the same, and equally wrong.
One says, don't change the economy unless you are sure the change will be good. The other says, don't change the ecology unless you are sure the change will be good.
But we can never be completely sure. "We should weigh the costs, benefits, and probabilities as best as possible" and "take ... measured anticipatory action."
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