I like economics. Most of the time I don’t understand economics but I do enjoy the subject. I learnt about it from two professors, microeconomics from a wonderful old man and macroeconomics from a cantankerous old fool. Hence while macroeconomics has always been a mystery to me, I know what’s going on in microeconomics and I’ve always found that half of the dismal science much more interesting. That’s why the “Freakonomics” series appeals to me so much. It takes microeconomics and just shows off just how cool it is. I just finished “Superfreakonomics” by Stephen J. Dubner and Steven Levitt and I absolutely loved it.
“Superfreakonomics” was overall, a very different book from its predecessor, with less of a focus on hard stats and more of a focus on coming up with counter-intuitive conclusions. It got a lot of controversy when it first came out on almost every conclusion that the authors drew but especially for the chapter on global warming which we’ll get to later. What I want to focus on is what I think the authors wanted you to take away from the book.
1. Everyone Respond to Incentives
This is what they talked about in the first book as well and it’s also the first thing you learn in a microeconomics course. Drawing on Levitt’s and other economists’ research, the two show how an unusual statistical correlation comes about because of an incentive in place that you probably never even thought about. This point is driven home when they talk about the problems behavioral economists ran into when testing humanity’s inherent altruism. In a lab, it appears as though humans are all altruistic but when you conduct the same sorts of tests in the real world, the lab results don’t hold up. This is probably because the lab has incentives to keep people altruistic, such as the fact that a PhD is watching whether you’re going to be a jerk or not. The authors come to the conclusion that people are altruistic when there’s an incentive for them to be altruistic.
Applying that idea, let’s talk about Haiti. Recently I was in a grocery store which was running a charity drive. They were selling books for a dollar each with all money going to the Haitian relief fund. What incentives are at play here? If somebody spots a book that they actually want to get then they’d probably be willing to pay much more than a dollar. But whether they want to buy the book which is worth more than a dollar to them, or they to give their money away, in this situation you’re asking them for only one dollar. Also, if they don’t spot a book they like, then they probably won’t donate any money at all meaning that there may even be a disincentive to donating money. Needless to say, I don’t think this strategy is helping the Haitians.
I’d suggest implementing a strategy that some stores in South Africa use to great effect. On every checkout counter put a small transparent box, half full of money and loudly proclaim that all money in the box is going to charity. Whenever someone pays with cash, they get a handful of coins and that box becomes an easy place to dump them (Incentive 1). Also it makes you feel good (Incentive 2). On top of that, the cashier is standing right in front of you, watching if you’re going to donate anything or just be an uncaring jerk (Incentive 3). And what do you do with the books? Give them to a library, why are grocery stores selling books anyway?
2. Think Outside the Box
I don’t know if this is the point that the book was supposed to make but that’s certainly what I heard, especially in the last two chapters where the authors talk about some simple, cheap fixes that solved seemingly insurmountable problems. One of the chapters focused entirely on global warming and talked about the difficulties in our current strategies of reducing carbon emissions, how expensive it would be and how uncertain we are whether it would even be effective. They use the parable of shit (a brilliant story found in the first few paragraphs of this article) to show how similar to the situation at the turn of the 19th century, we are confronting a massive problem and the best way to solve it is some sort of technological advancement that would make the problem go away. This kind of technological advancement already exists, they say, and it’s called geoengineering.
Nobody is happy with this chapter. Lots of people have written very detailed responses about everything that’s wrong with it. I have two issues with these critiques. First, why are people so mad? The first time I heard about these solutions I thought they were awesome. We pumped bad stuff into the atmosphere messing up the planet, why not pump some good stuff up there to fix it? Apparently my reaction was shared only by the minority, with the majority gathering their pitchforks and deciding to raise some hell. Is this how people are supposed to react to new ideas? I don’t think anyone who picked up “Superfreakonomics” was expecting to see some concrete solutions to global warming, after all one of the authors is an economist, the other a writer and neither are climatologists. I’m surprised people weren’t more amused by the chapter than inflamed by it. It seems like even suggesting that there may be an easy fix to a this problem will get you in trouble. Why? I think a lot of that has to do with the way we talk about global warming and conservation in general. The global warming problem seems to have taken on some of the rhetoric of religion with Al Gore as our savior and humanity atoning for its sins. We harmed the planet, we’re guilty and we need to pay for our crimes. It hurts to drive a Hybrid instead of a Hummer and not crank the heat up in winter and it’s easier to digest these changes when they’re not just conservation efforts but the penance that we must undertake. If you’re saying that we can repent without it being painful, you must be wrong.
Either way, the second problem I have is that debating whether this chapter is the worst or greatest piece of global warming literature ever is completely missing the point. While the critics do serve an important function, Levitt and Dubner probably weren’t trying to say we should go all out with geoengineering solutions which could significantly harm the planet. They were pointing out that we’re becoming increasingly narrow minded in the ways we approach climate change and that other solutions can exist which we should be open to. This isn’t true in just global warming but in many issues that we’re faced with. It’s time we stopped acting like the world’s going to end and started figuring out what we can do to make it better. And that doesn’t just mean banning trays at your school’s cafeteria or driving a hybrid.
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