Philosophy was once a passion of mine. I viewed it as a field of intellectual problems which required no specific knowledge, the perfect mental exercise. Then I got older. I realized what I viewed as philosophy was an ideal far removed from what philosophers actually do.
I lost interest in the field, but I never lost interest in the idea. I still love to examine philosophical issues, and I like when it involves other topics I’m interested in. Today I’m going to talk a bit about one philosophical issue involving global warming.
This issue came up in a guest post at Anders’s blog, written by a moderator there, Rachel. She discusses cost-benefit analyses done regarding global warming:
One assumption which is often made in these cost-benefit analyses is that future harms and benefits are worth less than harms and benefits which occur today. Philosophers call this discounting the future and they seem to disagree with economists on the merits of discounting in this way. They argue that whether something is good or bad has nothing to do with the time in which it happened. Harms are just as bad regardless of whether we endure them today or the people living 100 years from now endure them.
Unfortunately, Rachel misses a key distinction. Philosophers (may) disagree with the notion she describes because philosophers look at morality, not economics. A murder today is morally repugnant as a murder tomorrow. An economist can believe the same yet observe a murder at a time when a city has only 10 people is more economically damaging than a murder when a city has 10,000 people.
The distinction between economic and moral standards is key when examining the global warming issue. The two standards need not give the same results. A “discount rate” justified by one may not be justified by the other.
Rachel goes on to say she thinks some discounting seems reasonable. One example:
If we want to compare the prices of things at different times then we need to adjust them in ways that make such comparisons accurate as commodities change in price over time. So this seems fair enough to me.
Is basically just her accepting we ought to try to account for things like inflation. A dollar today is not worth the same as it was in 1964, and it won’t be worth the same in 2064. Money is an abstract we use to try to represent the underlying value of things. Of course what should be interested in is that underlying value, not an abstract.
Things get more interesting when Rachel discusses another point:
I’ve heard other people argue something similar: future generations will be wealthier than us and so this is justification for discounting the costs and benefits we leave to them. The philosopher Derek Parfit disagrees with this and says “These two arguments do not justify a social discount rate. The ground for discounting these future benefits is not that they lie further in the future, but that they will go to people who are better off“. ( source: http://faculty.smu.edu/jkazez/parfitsocialdiscountrate.pdf)
Unfortunately, she misrepresents Derek Parfit’s actual view. Parfit does not disagree with the idea she expresses. He doesn’t say it is wrong to think measurements of costs and benefits should depend upon the wealth of the individuals. What Parfit actually says is it is wrong to represent an issue like that with a single “discount value” calculated entirely on time. He’s right. We can’t pick some value, say 2%, and expect it to correspond with people’s wealth indefinitely.
Parfit says “we should say what we mean.” In other words, if we say the economic considerations of wealthy people should be treated differently than those of poor people, we should hold to that standard. We shouldn’t mask it by saying we’re discounting on time; we should say we’re discounting based on wealth.
Rachel seems to get this idea regarding the next point she discusses. She discusses the issue of how uncertainty should affect our decisions then says:
I think what he’s saying is that when we justify an outcome because it is uncertain, our reason is not because it occurs in the future, but because it is uncertain.
This is absolutely correct. When using a single “discount value,” that value is intended to represent many different issues. It is a proxy for things like uncertainty and wealth and disparity. All Parfit says is it’s a bad proxy so we shouldn’t use it. That does little to support Rachel’s conclusion:
I accept that maybe some discounting is useful, discounting commodities for instance, but it seems to me that some of the other things we discount on the basis of time, are unjustifiable and at odds with our reasons for discounting them in the first place which suggests to me that our conclusions are probably wrong.
Parfit calls into question discounting things “on the basis of time” because he thinks time is a bad proxy for them. Even if he’s right, that doesn’t say whether or not we should discount them. He’s not looking at whether or not we should discount those things. He’s only looking at the statistics of how well time can proxy them. To show the difference, let’s consider a mental problem Rachel discusses:
It took me a while to understand this so I’ll elaborate with the example that Parfit gives. Suppose some radiation is going to escape from somewhere and potentially cause a billion deaths in 400 years. If we discount those deaths at 5% per year, then a billion deaths in 400 years is worth less morally than one death next year. This is indefensible.
Rachel goes on to accurately explain uncertainty could justify weighing one life now with a billion lives in 400 years. However, there’s another issue we should consider. Suppose Bob is the guy whose life is on the line today. Suppose he is 30 year old business owner. If he dies today, his business will collapse. If he survives, his business will grow and grow. In 400 years time, it will have become a major company which has had major economic impacts on the world.
Would Bob’s death today be better than his company growing for 400 years at the cost of a billion lives? Morally, I think we’d all say no. I think we’d all say no even if only a thousand, or even a hundred, lives would be lost. But what about economically? From an economic perspective, some lives are worth more than others. The homeless man on the street corner doesn’t contribute as much to the world’s economics as the guy who owns a local grocery store.
If we accept that, it seems inevitable we must accept a life of a person today could be worth more (economically) than the life of a person in the future because of “interest” on their life. We If we accept that, must accept it may be possible doing nothing about global warming will cause the world’s economy to be better overall, even if it comes at the cost of some number of lives.
If a strong economy is all that matters, there is no question we should discount future costs for a variety of factors. It may be, as Parfit argues, those factors can’t be represented by a single proxy (time). If so, we’d need to use more variables in our formulas or find some other approach.
But a strong economy is not all that matters. We don’t take the GDP of each year for a country, sum it up and say that’s the value of the country. There are a lot of other things we care about. What kind of decisions can we make if we ignore them?
Economics is like all forms of statistics. It may give us an answer, but we have to decide what the question is. We have to decide what we value.