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There’s no pure economics unpolluted by politics

- May 28, 2013

I agree with almost everything Dan Kahan writes here, where he discusses how people’s attitudes about global warming could be changed by looking at the financial decisions of businesses:

Market actors are economically, not ideologically motivated. Moreover, cognitive biases are likely to cancel out, leaving only the signal associated with informed assessments, by multiple rational and self-interested actors, of the weight and practical importance of the best available evidence on climate.

Kahan points to examples such as “exploitation of oil reserves that can be accessed more readily as polar ice caps melt.” He continues:

The index, btw, has to consist in securities (and the like) that reflect economic opportunities created by global warming.

It cannot include economic opportunities created by government policies to promote carbon-reduction. That market will reflect expectations about political forces, not natural ones (a matter that might be interesting but that isn’t probative of beliefs in whether climate change will occur–only in what sorts of things will occur in democratic politics, which is governed by its own peculiar laws).

I know what he means here but I think you have to be careful in this sort of formulation. Investment decisions always exist in a political context. Tax policy, labor laws, fiscal policy, environmental laws, all of it. I don’t think it makes sense to talk about economic actions in the absence of politics.

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