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GLOBAL DEVELOPMENT AND ENVIRONMENT INSTITUTE WORKING PAPER NO. 11-02 Ethics and the Economist: What Climate Change Demands of Us J. A. Nelson May 2011 Tufts University Medford MA 02155, USA http://ase.tufts.edu/gdae This working paper is also available as an E3 (Economists for Equity and the Environment, e3network.org/) White Paper. A revised version will be published in Ecological Economics. Copyright 2011 Global Development and Environment Institute, Tufts University GDAE Working Paper No. 11-02: Ethics and the Economist: What Climate Change Demands of Us Abstract: Climate change is changing not only our physical world, but also our intellectual, social, and moral worlds. We are realizing that our situation is profoundly unsafe, interdependent, and uncertain. What, then, does climate change demand of us, as human beings and as economists? A discipline of economics based on Enlightenment notions of mechanism and disembodied rationality is not suited to present problems. This essay suggests three major requirements: first, that we take action; second, that we work together; and third, that we focus on avoiding the worst, rather than obtaining the optimal. The essay concludes with suggestions of specific steps that economists can take as researchers, teachers, and in our other roles. Keywords: climate change; ethics; catastrophe; uncertainty; interdependence; Enlightenment; responsibility; embodied reason 1 GDAE Working Paper No. 11-02: Ethics and the Economist: What Climate Change Demands of Us Ethics and the Economist: What Climate Change Demands of Us J. A. Nelson Climate change is changing our world. Not only is it changing our physical world, but also our intellectual, social, and moral worlds, in ways that we could not have imagined a generation or two ago. The science of climate change, and the political impasses associated with dealing with it, demonstrate that we are in a profoundly unsafe, interdependent, and uncertain world. We are already experiencing levels of greenhouse gases, the likes of which have not been seen on earth for at least 800,000 years (Weitzman 2011, 3). We are facing a need for globally coordinated action that humans, having evolved in smaller groups of kin and nation, have never before attempted. We are—contrary to our usual processes of learning or transformation—facing a problem of having to act in advance, instead of after, actually experiencing the consequence of our actions (Stern 2011, 2). We are, if we are honest about it, facing the possibility that all the skills and knowledge we've gained through our physical and social evolution and scientific investigations to date may not be adequate, or of the right kind, to save the human race (and the rest of the life on the planet) from catastrophic, dislocating changes. While having these facts right in front of us does not necessarily mean that we all see them—denial being one habitual human response to difficulties—this essay leaves the task of describing and defending climate science to others. Likewise, many cogent critiques of the application of standard economic benefit-cost approaches to climate change, and many convincing arguments about the impossibility of ignoring the ethical 2 GDAE Working Paper No. 11-02: Ethics and the Economist: What Climate Change Demands of Us dimensions of climate change economics, have already been written.1 Rather than repeat these arguments, this essay attempts to be primarily forward-looking and practical. What does climate change demand of economists? Given that we need to grapple with ethical issues, how can we best do so? Given that we do research and/or teach, how should what we now know—and, perhaps even more importantly, what we now know that we do not know—affect our practices in these areas? 1. Enlightenment: Beyond the Beta Version Nicholas Stern has said that we need a "new industrial revolution" to address climate change (Stern 2011, 6). He also suggests that economists must consult other fields—including "science, technology, philosophy, economic history, [and] international relations"—as we develop our economic analysis (Stern 2011, 19). An even more basic revolution is, however, needed as well: An overhaul of the ideas of the Enlightenment, Beta Version, of the 18th century. This first version got off the drawing-boards of philosophers and has put to use in scientific, economic, and political practices worldwide. But it seems that a great many of the assumptions underlying Enlightenment Beta and early scientific thought were wrong, or at best very incomplete. The continued advance of science has, in fact, undermined the earlier version—and with it, the economics based on it. It has long been a central tenet of economic analysis, for example, that the best decision-making comes from having as much information as possible about the options at hand, and then—setting emotions aside—cooling performing a thoroughly rational (in the 1 See, for example, DeCanio (2003), Howarth (2003), Dietz and Stern (2008), and Ackerman (2009). 3 GDAE Working Paper No. 11-02: Ethics and the Economist: What Climate Change Demands of Us sense of following rules of logic) comparison and ranking of various outcomes. More recent work on decision-making, in contrast, demonstrates that less information and deliberation can sometimes lead to more satisfactory outcomes. Faced with too many choices, too much information, and/or too much emphasis on weighing and comparing, psychologists have found, people may make worse choices on decisions from jams to houses (Iyengar and Lepper 2000; Dijksterhuis, Bos et al. 2006). Use of intuition, rules of thumb, and unconscious processes may lead, in some cases, to better outcomes with less regret (Gigerenzer 2007). Emotions have been found to be essential to rational (in the broad sense of reasonable and goal-serving) decision-making (Damasio 1994). A newer view of reason that is rapidly gaining ground (outside of economics) emphasizes the embodied nature of our consciousness. As put by George Lakoff and Mark Johnson, Reason is not a transcendent feature of the universe of or disembodied mind. Instead, it is shaped crucially by the peculiarities of our human bodies, by the remarkable details of the neural structure of our brains, and by the specifics of our everyday functioning in the world...Reason is evolutionary...Reason is not completely conscious, but mostly unconscious. Reason is not purely literal, but largely metaphorical and imaginative. Reason is not dispassionate, but emotionally engaged. (Lakoff and Johnson 1999, 4) Nor is reason something that is possessed by a lone organism in isolation: "The full understanding of mental phenomena should be sought in the context of an organism that is interacting with an environment" (Damasio 1997, 170). To give an example relevant to the case at hand, suppose you are taking a walk in a forest at dusk. You suddenly see something long, thin, and curving before you on the path and instinctively jump back. On second glance, it turns out that this object is just a piece of discarded rope. Was it rational for you to have recoiled? Defining rationality in the narrow sense of referring to only logic and deliberation, it was not rational. Because a 4 GDAE Working Paper No. 11-02: Ethics and the Economist: What Climate Change Demands of Us piece of discarded rope is not dangerous, your recoil was not rationally justified by "the facts." Considering rationality in a broader and evolutionary sense, however, jumping backwards was a perfectly reasonable and, on average over such cases, likely survivalenhancing response. Instinctual recoil comes from a part of the brain that acts before the analytical processes have a chance to kick in. Had the rope been a snake, you could have been bitten while standing still waiting for your slower neural processes to inspect the object, weigh the evidence, and come to a decision. Holding out for the thoroughly informed and justified response is a sort of rationality that may be serviceable in simple, safe, and slow environments, but is not necessarily serviceable outside of them. It has also long been believed that individuals' preferences are stable, and immediately accessible for use in our rational deliberations. Our social and physical environments, however, have been shown to affect how we act in ways that are quite inaccessible to our conscious mind. Psychological studies of framing effects show repeatedly that exposure to movies that are funny or sad, drinks that are cold or hot, or smells that are good or bad, as well as minor changes to the wording of questions, can change our expressed opinions, stated reasons, and decisions.2 The conscious preferences thought to be sacrosanct in the rational choice view may in fact often not exist until they are externally, perhaps somewhat capriciously, and unconsciously created. Individual freedom has long been taken as the summum bonum to be aimed for, especially in regards to economic systems. New science is pointing to our deep ties to one another, though processes such as mirror neurons which make us feel and repeat in our own bodies the motions we see others enacting (Iacoboni 2008). The point is not that 2 See, as one examples of this now vast literature, Williams and Bargh (2008). Some of these phenomena have been incorporated into behavioral economics (Kahneman 2003). 5 GDAE Working Paper No. 11-02: Ethics and the Economist: What Climate Change Demands of Us individual freedom is unimportant, but that a monomaniacal focus on this "good" above all others leads to a serious neglect of—and even a blindness to—the interdependencies of family and community. And, perhaps even more importantly, it has been assumed that the world we live in is such that it is amendable to cool, detached investigation and deliberation, and analytical models based on the mathematics of physics and engineering. In Enlightenment Beta the central image of the world was of a clockwork: Intricate but also thoroughly knowable, controllable, and mechanical. If the world was made by (Divine) Reason, and our species was uniquely (it was assumed) endowed with reason in order to know it and control it, then our technology and our philosophy makes us into demi-gods. But, as mentioned above, new generation science demonstrates that our human abilities of perception and cogitation are, in fact, evolved and embodied rather than being ethereally transmitted from a transcendent source. Even if we are convinced that there is a fundamental mathematical structure to the universe, new science suggests that a comparison of the complexity of this structure, vis a vis the limitations of our human wetware (brains), should be humbling. Epistemologically speaking, our knowledge is unavoidably limited and incomplete. In Enlightenment Beta, the Divine Clockmaker set the world into ticking for our benefit. Such helpful world, under our dominion, would provide for us and be safe. It would wait while we make our investigations and thoughtfully consider our next, progress-making interventions, quite free from worry about our own survival or subsistence. Yet as early as the 1890s, and exactly in the center of the newly forming Neoclassical school of economics, such an image was already being questioned. Writing 6 GDAE Working Paper No. 11-02: Ethics and the Economist: What Climate Change Demands of Us in 1898 Alfred Marshall, the original great systematizer of Neoclassical economics, warned us about taking this image too seriously. Marshall recognized that Neoclassical economic models were based—not on revealed truth—but on metaphor: "There is a fairly close analogy between the earlier stages of economic reasoning and the devices of physical statics," he wrote, whereby by treating certain phenomena in isolation from each other can give some "exact and firm handling of a narrow issue" (Marshall 1898, 40). In particular, he noted, Western Europe was, at the time in which he was writing, in a unique window of time and space uniquely free of the "black shadow" (1898, 41) of ecological limits. Consistent with what had been historically experienced at his time, he conceived of these limits in terms of constraints imposed by agricultural fertility on population growth. Even with no knowledge of climate change, however, Marshall perceived that within some generations ecological limits would again become important, and that economics would need to go beyond the "early stage" of physics analogies and notions of stable equilibria, and develop "later stage" organic notions of permeating "mutual influence" (43) based on biological analogies of "life and decay" (43). Marshall also recognized, as just discussed above, our epistemological constraints: "Man's [sic] powers are limited: almost every one of nature's riddles is complex" (40). Unfortunately, however, Marshall's warnings that holding onto the physics metaphor beyond its usefulness would tend to "confuse and warp the judgment" (39), and that freedom from limits was only temporary, seem to have been thoroughly forgotten by most followers of the school he helped to found. The physical sciences have long since moved beyond the Newtonian mechanics on which Neoclassical economics modeled itself. The new science of climate change 7 GDAE Working Paper No. 11-02: Ethics and the Economist: What Climate Change Demands of Us points out the (rather obviously, if we learn from the transition from our past to our present) fact that the future is unpredictable and that our well-being or even survival are not guaranteed. Climate change tells us that the world is not passive, submissive, willing to wait, and in existence simply for our benefit. Far from being a clockwork under our dominion, the climate system is, as one climate scientist has put it, "an angry beast and we are poking it with sticks."3 In Enlightenment Beta, the world was seen as supportive of the rational individual, predictable, and safe. The fields of physical science, philosophy, and economics that grew out of this mode of thought reflected these bedrock assumptions, employing a process in which bits of the world were analytically separated and explored. The goal was to find the universal rules and principles governing the world-mechanism. Great strides were made, particularly in areas in which this world view and the actual world have some resemblance. But new science points out that the world is also alive— and profoundly unsafe, interdependent, and uncertain. In the context of climate change, what does this demand of us? This essay suggests three central demands: first, that we take action; second, that we work together, and third, that we avoid the worst cases. But first, a few words are needed about some current views on ethics and economics that might seem to negate the need for any changes at all. 2. Ethics and Economics: Beyond the Split To many economists, of course, discussion of ethics seems to be beside the point. Economic analysis is sometimes perceived of as value-free and objective, while ethical judgments are normative and subjective. Such views have been debunked at length by 3 Weitzman (2010), quoting climate scientist Wallace Broecker. 8 GDAE Working Paper No. 11-02: Ethics and the Economist: What Climate Change Demands of Us climate economists (e.g., Howarth 2003; Dietz and Stern 2008), as well as philosophers (e.g., Putnam 2003; Kitcher 2011), and a full analysis will not be attempted here. Suffice it to note that contemporary Neoclassical orthodoxy contains myriad value-judgments, that only appear as objective from within a culture of disciplinary group-think in which alternatives are simply not entertained. The unquestioned priority given to individual freedom of choice, for example, is clearly a value judgment, in that it ranks freedom above other possible—for example, more pro-social or pro-environment—values. The methodological valuing of the elegance, precision, and "artificial crispness" (Weitzman 2009, 18) of mathematical models of optimization involves a normative and subjective judgment that these qualities are of more worth than other methodological goals, such as richness or realism. And, of course, economists should recognize the issue of opportunity cost: Research is not done in a vacuum, and the very question of our salaries and research budgets is based on decisions that value some lines of research above others. If we are absorbed in rearranging deck chairs on the Titanic when we could have helped chart another course, we will bear some moral responsibility for the ship going down. Alternatively, we as economists may realize the relevance of ethics, but consider it to be in the domain of the Philosophy Department. Paying more attention to ethics might seem to mean that we must become versed in deontology, consequentialism, virtue ethics, Kant, Rawls, Aristotle, and the like—or at least read those economists who try to translate such material into more familiar terms. Believing that such an investment is necessary before one can take an ethical stand, however, could be compared to believing that one must invest in economics graduate training before one can be allowed to make a purchase at the grocery store. Ethics is not something owned by the philosophy 9