Tuesday, October 2, 2012

Utility Maximization and the Welfare State

Bjorn Lomborg is an unusual kind of academic. He's unusual in the fact that political ideology means less to him than utilitarianism. For example, there are plenty of professors in the faculty lounges across the United States who will support faddish social causes that wouldn't promote as much social good as other causes, but they do so because they implicitly put their political ideology ahead of their ostensible purpose to maximize social welfare.

Anthropogenic climate change (global warming) is the most prominent example. It's almost exclusively the concern of the intelligentsia living in post-industrial markets. The reason why emerging markets are so opposed to global warming is because the policy prescriptions would disproportionately hurt their economies the most.

The reason is simple. The modern economy relies on cheap energy. And the cheapest forms of energy (coal) tend to be the most polluting. Developed markets like the United States and Western Europe already have the capital wealth in place to decrease their reliance on dirty forms of energy like coal power (albeit at extraordinary financial cost). But markets like China, India, and Brazil don't.

Ostensibly, the goal of the green lobby is to reverse global warming to create a sustainable environment that will benefit all of society. There is no doubt that clean energy is a public good. But it takes a lot of money to have clean energy. And that's money emerging markets don't have.

If the stated goal of the green lobby is to maximize the social welfare, then global warming shouldn't be their number one priority. This is where Bjorn Lomborg comes in. He posits that in a world of limited resources, we have to prioritize public policy that does the most good for the least amount of money.

Things like promoting increased food security through micronutrient supplementation/fortification (distributing mineral/vitamin tablets), increased access to high yield GMO crops, and nutrition education can greatly benefit humanity by preventing malnutrition and starvation in countries that are extremely poor.

Spending money on more expensive sources of energy provide very little benefit (which goes mostly to developed markets and the people who need it the least). Norman Borlaug, who pioneered GMO crop development, is estimated to have saved a billion people from starvation. Increasing electricity generation by solar from .01% to .5% would cost the US 1000 times as much money as was spent supporting Borlaug's research, but it wouldn't come close to saving even a thousandth of that number.

The bottom line is social welfare is about human lives. And saving human lives is vastly more beneficial than making human lives marginally more comfortable.


  1. Is investing in clean energy infrastructure and heavily curbing fossil fuel more costly than, say, relocating hundreds of millions of Chinese people from coastal cities? Or losing a wheat harvest to climate change?

    Assuming the global warming alarmists are correct of course.

  2. There's an interesting debate by Intelligence Squared on global warming as to whether or not it is a crisis. The debate panel consisted of intelligent people that were not a part of any lobby, green or otherwise. It's an interesting read.

  3. Actually Crichton had the best points. He talked about how the global warming crisis was about looking into the future and trying to predict where the climate would be. He said:

    Everyday 30,000 people on this planet die of the diseases of poverty. There are, a third of the planet doesn‘t have electricity. We have a billion people with no clean water, we have half a billion people going to bed hungry every night. Do we care about this? It seems that we don‘t. It seems that we would rather look a hundred years into the future than pay attention to what‘s going on now. I think that's unacceptable. I think that‘s really a disgrace.

    1. Crichton's speech on aliens causing global warming was actually extremely good. I guess he adapted it to fit that panel.

      I actually was going to cite Crichton in response to ChargerCarl, but I guess you did it for me. Thanks.

  4. Don't know why because its not a very good speech. The Cost of moving most of the worlds population and cities is still a much greater cost.

    1. You're putting up a false premise. What makes you think we'll need to move most of the world's population and cities? The science out there hasn't done much except prove that average temperatures have risen slightly over the past century. It hasn't proven that it'll flood the coastal regions.

      There are pressing concerns that are happening right now that will kill thousands of people each day that we have the power to mitigate. It's basic triage theory. We don't know whether AGW will force us to uproot population centers living at or near the coastline. But I do know that there are a lot of malnourished kids out there who could have a vastly improved quality of life simply by giving them access to inexpensive vitamin k pills.

  5. History has shown that warmer temperatures are actually a good thing for humanity. The largest land masses on the planet in Canada and Russia are unproductive because of colder temperatures. It is not wise to automatically assume that if the the temperature rises it will be bad. It may very well be a great thing.