Saturday, August 31, 2013

Book Review: The Impact of Climate Change by Carolyn Fry

The Impact of Climate Change: The World's Greatest Challenge in the Twenty-first Century by Carolyn Fry

I choose this book because I wanted a science-heavy read on climate change. Don't pull any punches trying to write to the laity. Lay it on me. That, of course, is going to mean I don't understand ALL of the science laid out in the book, but it was just what I was looking for. Fry goes through the basic science of climatology then goes on to show the data that has led to the consensus on anthropogenic climate change. She, thankfully, does not spend too much time providing data to counter the skeptics/deniers. For that type, there's plenty of evidence to convince them -- they just choose to remain skeptics.

The first four chapters are excellent. The last, on personal responsibility, left me a bit indifferent. This is mainly because of how Fry uses science and scientific models. Before I get into that, it's important to say that I liked this book and highly recommend it. My issues with the last chapter are important, but should not take away from how good the first four chapters are.

In discussing the environment and past effects, the science is near certain. With each step we take outside of empirical data and into scientific models (such as attempting to predict future scenarios), the certainty decreases. Fry is careful in her use of language in these situations, but I would like it to be made even more clear. Her assertion of the near certainty that humankind has affected the environment should also be balanced with the uncertainty (I would say "skepticism" but that word is loaded with meanings when it comes to climate) of scientific models that attempt to mimic the infinity complex nature of our world.

This difference is most apparent in the last chapter which deals will ways we can, as individuals and as a society, cut back our carbon footprint. She begins the chapter pointing out how we are increasingly giving up rural living for urban living. When stated positively that's fine. But there is a normative bent to her statement that makes it sound like giving up the country for the city is a bad thing. It is not. Urban living is GOOD for the environment. This is do to the benefits of economies of scale and is best spelled out by David Owen in Green Metropolis and The Conundrum.

While Fry's nuanced scientific language in the first four chapters is accurate, her choice of words in the last chapter is problematic. At one point she says that the wealthy would "rather pay more for flights than change their travel habits." The environment IS economics and all climate scientists should be more adept at using economic language. Surely there is a price at which even wealthy people will change their travel habits. What Fry meant to say was the amount airfare increased was not enough to change their habits. At some higher point, however, it would be.

The anti-plane bias also brings about another point, influenced by Owen: which is more efficient? Fry mentions how much CO2 is added to the climate by commercial flight and then says it's better to travel by train or bus. But she provides no data to back this up. As I said initially, I wanted a science heavy book. The data I would really love to see to answer this transportation question would not be absolute CO2 emissions by industry, but rather CO2 emissions per mile per person. Surely if I'm traveling to a conference in Chicago it would be better for the environment for me to fly than to drive. Economy of scale being the main factor. So instead of thinking about miles per gallon and absolutes so much, we should begin talking about travel in the sense of mile per ton carbon or some similar factor. Doing so would not only allow us to compare air travel to car travel, but also compare gas engine car travel to electric car travel.

Although I'm critical of the last chapter, however, I highly suggest this book for those looking for a pretty tough read that includes quite a bit of science.

Saturday, August 24, 2013

Obama, College, and Demand Curves

After President Obama's call to make college more affordable, several economists went off the rails. The main argument involved demand curves. When you increase demand (such as by making college "more affordable"), price goes up, not down. That's what economics textbooks have said in their first chapters for centuries. And it's usually right.

The case of college is different. The demand for college is set by the amount of students who have shown they are (1) smart enough, (2) determined enough, and (3) desirous enough to go to college. I would think the percentage of HS students (and non-traditional students) that meet these criteria remains relatively stable over the decades, although I have no data to back this up. In other words, intuitively, the demand for college has been stable for a long time.

What has happened is that the soaring cost of going to college has taken this group of students who want to attend college (demand) and removed some of them from the market completely. The cost of college is so high that this group doesn't even consider college an option regardless of what sort of opportunity cost calculations they do in their head. Since economics is all about CHOICE, and these students view their position as devoid of choice, this part of the demand for college has been almost a ghost. They are living human beings who have shown the traits needed to succeed in college, but the market has removed them from the equation as if they were inanimate. That's certainly not a good thing.

Now this would be a different story if we were talking about, say, the market for 5 star hotels in luxurious locations. For me as a public school teacher, I have no choice to stay at the new Four Seasons hotel in the Serengeti for two weeks. I'm not in the market at all. In this case, that's not a bad thing. The market is working as it should. So what is the qualitative difference between college and luxury getaways? Several.

First, there is the positive freedom of education. It isn't in the constitution, but our society believes that those who have a desire to learn also have a freedom to achieve that desire. This closely ties into Amartya Sen's views of development as freedom and Martha Nussbaum's views of creating capabilities.

Second, an educated citizenry is a social good. Not only does the person who graduates from college (hopefully) benefit from that education, but society as a whole benefits from their education. In economics speak, this is a positive externality. The good that society as a whole receives is not priced into that individual's tuition. The two exceptions being government grants and government subsidized loans where tax dollars are used to fund education. You can call this a Pigovian subsidy I suppose, but it makes sense even from a neoclassical econ viewpoint.

So, if we make college more affordable, do we skew demand curves? Yes and no. The number of students who have shown they have what it takes to make it in college does not increase. So no, demand does not increase. The number of students that have what it takes AND can make the opportunity cost choice to attend college WILL increase. In other words, those students who weren't even allowed in the market are now allowed in. So in this sense demand WILL increase. And possibly a bump in cost as well. Demand curves slope downwards of course.

So where do you make up the difference? How can we allow these students that were not allowed in the market into the market and still keep prices affordable? There's the rub.

Not quite. Colleges have a built in demand limiter which they have been failing miserably at using. It's called the application process. As I mentioned before, we can intuitively agree that the percentage of HS seniors that have what it takes to make it in college remains relatively stable. As about every college professor, student, or alumni will attest, however, colleges have been admitting more and more students who have NOT shown they have what it takes to make it in college. They require multiple streams of remediation in multiple subjects. They simply are not ready for college. Some of them could have been ready but their HS let them down. Others are probably better suited for vocational schools but haven't realized it yet. Still others may be freeloading off of government grants and subsidized loans they know they can't repay just to prolong childhood. Whatever the case, colleges themselves can remove these students that shouldn't be there from the market. This would thus allow room for the group that SHOULD have been there but had been removed. Demand curve remains intact.

BAM. I've solved the problem of college tuition. Stockholm, email me for contact info.

:)