Thursday, August 19, 2010

"an attitude of epistemic humility"

That's a quote from the end of a Jim Manzi article in TNR: "Confusion Reigns at TNR on the Stimulus ... For Good Reason". The confusion he's talking about has to do not just with differing opinions, Keynesian and otherwise, over the effectiveness of the "stimulus" itself, but also with a spreading recognition that there is no good way even to assess its effectiveness -- because however good or bad the results of a policy, you can always argue that they would have been better or worse if the policy hadn't been in place. As he says (quoting himslef in an earlier article), "we have no reliable way to measure counterfactuals".

Now, this may be a little too humble -- if a policy is implemented on the basis of some projection of its results, and that projection is then shown to be wrong, it's at least going to cast some doubt on the policy and the theory underlying its projection, which is what's happening now with the Stimulus and its Keynesian defenders (Krugman, e.g.). And often there are other ways of assessing than through counterfactual reruns of history -- such as by comparing different approaches to the same problem in different jurisdictions, as Josef Joffe, a colleague of Manzi's, does in "The International Stimulus Sweepstakes: Who Wins?". (See also this post by Megan McArdle, on "Hoovernomics".) But in general this lesson that we have a difficult time, even after a policy has been put in place and operating, much less before, in knowing whether and to what degree it was effective, should restrain the urge to make very large bets, using other people's money and lives, on theoretical/ideological premises.

Suppose, now, that we were to change focus, and apply a little of that "epistemic humility" to the climate debate. We'd see a greater recognition of the inherent uncertainties in long-range climate modeling in the first place, and much greater attention paid to the huge uncertainties inherent in efforts to model real economic costs and benefits inherent in any policy approach toward the issue, in the second place. It's the latter, of course, that should give pause to anyone not a zealot. When the situation is one in which any action, including no action, carries risks that are difficult or impossible to calculate, it's generally not a good time to make a large leap of faith/ideology. Instead, Manzi's proposed guidelines for policy in the face of this kind of uncertainty seem like a much more rational approach, to climate change as well as to economic crises:
... “boldness” in the face of ignorance should not be seen in heroic terms. It is a desperate move taken only when other options are exhausted, and with our eyes open to the fact that we are taking a wild risk.... We are walking into a casino and putting $800 billion dollars down on a single bet in a game where we don’t even know the rules. In general, in the face of this kind of uncertainty, we ought to seek policy interventions that are as narrowly targeted as is consistent with addressing the problem; tested prior to implementation to whatever extent possible; hedged on multiple dimensions; and designed to be as reversible as is practicable.
Carbon taxes as a means of forcing down global emissions to some early industrial level are an example of a policy too grandiose, too uncertain, and too premature to meet these criteria.

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