Climate change denial, narratives, and loss aversion

The Conversation had an interesting Climate Explained article a few weeks ago by Peter Ellerton (University of Queensland), which answered the question:

Why do humans instinctively reject evidence contrary to their beliefs?

The question was, of course, asked in the context of climate change denial. Ellerton's response included this:

We understand the world and our role in it by creating narratives that have explanatory power, make sense of the complexity of our lives and give us a sense of purpose and place.

These narratives can be political, social, religious, scientific or cultural and help define our sense of identity and belonging. Ultimately, they connect our experiences together and help us find coherence and meaning.

Narratives are not trivial things to mess with. They help us form stable cognitive and emotional patterns that are resistant to change and potentially antagonistic to agents of change (such as people trying to make us change our mind about something we believe).

If new information threatens the coherence of our belief set, if we cannot assimilate it into our existing beliefs without creating cognitive or emotional turbulence, then we might look for reasons to minimise or dismiss it.

I like the framing about understanding the world through the narratives we tell ourselves. However, Ellerton could easily have gone a bit further in his explanation, linking the unwillingness to accept new information that threatens our narrative to the behavioural economics concepts of endowment effects and loss aversion, as I have previously done in this 2018 post:

People are loss averse. We value losses much more than equivalent gains (in other words, we like to avoid losses much more than we like to capture equivalent gains). Loss aversion makes people subject to the endowment effect - we are unwilling to give up something that we already have, because then we would face a loss (and we are loss averse). Or at least, there would have to be a big offsetting gain in order to convince us to give something up that we already have. The endowment effect applies to objects (the original Richard Thaler experiment that demonstrated endowment effects gave people coffee mugs), but it also applies to ideas.

I've thought for a long time that ideology was simply an extreme example of the endowment effect and loss aversion in practice. Haven't you ever wondered why it's so difficult to convince some people of the rightness of your way of thinking? It's because, in order for them to agree with you, that other person would have to give up their own way of thinking, and that would be a loss (and they are loss averse). It seems unlikely that the benefits of agreeing with you are enough to offset the loss they feel from giving up their prior beliefs, at least for some people. Once you consider loss aversion, it's easy to see how ideologies can become entrenched. An ideology is simply lots of people suffering from loss aversion and the endowment effect.

Climate change denial is a good example of an ideological viewpoint. People are endowed with a particular view about climate change. They are unwilling to give up that view, because that would involve a loss to them (a loss of one of their beliefs), and people are loss averse (they want to avoid losses). So, people are reluctant to adjust their internal narratives about climate change, even in the face of overwhelming evidence, because they are loss averse.

Read more:

• Confirmation bias and climate change maths

Book review: The Soulful Science

I've been a bit quiet on the blog the last week or so, because I've been busy with population projections work (more on that in a future post). However, I have found time to read, and I just finished Diane Coyle's 2008 book The Soulful Science. The book contains a summary of recent advances (at least, up to 2008) in economics research, and to my mind she does an even better job of it than similar books of a similar vintage such as Economics 2.0 (which I reviewed here). Coyle has an ambitious goal for the book, expressed in its first sentences:

I want to persuade you that economics gets an unfairly bad press. Even though economists are widely criticized for either failing to predict the financial crash, or for causing it, or sometimes both, economics is nevertheless entering a golden age.

It seems to me that those who might benefit most from reading a book with that purpose in mind, are unlikely to be willing to read it. As Coyle notes:

The popular unpopularity of economics rests on perceptions which are twenty or thirty years out of date and were always a bit of a caricature anyway.

In my experience, people have a misguided view of what economics is and what economists do. Towards the end of the book, Coyle discusses what the nonspecialist sees of economics, being:

...largely the kind of macroeconomic debate covered in the news programs and newspapers: the forecasts about how much the economy will grow or how severe the recession will be, what will happen to inflation or the dollar, whether the financial markets will go up or down. Most of this economics is:

(a) of poor quality and spuriously precise, as it's not possible to forecast these things in any detail...

(b) jargon-ridden and possibly not understood even by the person - often not actually an economist but an investment manager or media pundit - spouting the jargon on television; and

(c) being used for a purpose such as advancing one political party or gaining ones' employer some good PR. 

Nothing has really changed in the twelve years since this book was published. The problems of the misunderstanding of what economics is, and negative public perception of economics, are not new issues, and aren't going away any time soon.

So, one book isn't going to unwind economics' 'popular unpopularity'. However, I do see great value in this book, for beginning economics students trying to get a sense of the possibilities. Even though the book, and the research to which it refers, is getting a bit dated, it still outlines a number of interesting (and relatively recent) developments in economics research, including advances in economic history, models of economic growth, life satisfaction, and the economics of information. I certainly made a number of notes that I will use in teaching next year.

Coyle is also an excellent writer, and incredibly well-read (as a quick few minutes spent on her blog, The Enlightened Economist, provides ample evidence to support). She also embeds a lot of subtle (and sometimes not so subtle) humour into the book. For instance, where else could you read about Jeremy Bentham's testicles?:

In fact, Bentham was an all-round eccentric. He was ahead of his time in wearing knitted woollen underpants (so it was discovered post mortem by Mr. Smith): most Victorian men simply tucked their shirt tails between their legs. And, whether or not due to the scratch of wool on his testicles, Bentham was the intellectual father of utilitarianism, the philosophy that can be summed up as "the greatest happiness of the greatest number."

I really enjoyed this book, and I highly recommend it to current and future students of economics. It captures more 'mainstream' economics research than books like Freakonomics, but does so in a way that is engaging and entertaining. I wish there were more books like this, capturing economics research advances in the twelve years since.

PhD students shouldn't be picking fruit

An email from the University of Auckland to some PhD students blew up in the media on Thursday and Friday. As the New Zealand Herald reported:

Auckland University has advised its doctoral students to "take a holiday from your academic work" - and go fruit picking.

The email, sent to all PhD students in the university's School of Cultures, Languages and Linguistics, has drawn astonished and sarcastic comments from students.

"As we near the end of the year, some of you may be wondering about whether to take a holiday from your academic work schedule," the email says.

"If it is possible for you to take a break, we really recommend that you do so. It has been a very difficult year, and most of us have not left Auckland at all. A break out of the city doing a very different activities [sic] can refresh the mind and body and help you have a productive year in 2021.

This rightly led to a collective 'WTF?' from PhD students. However, much of the commenting online seems to be of the form "When I was a student, we picked fruit during summer...". This demonstrates how little the general public understands what it is that PhD students do, and a failure to consider the opportunity cost of fruit picking.

Most undergraduate students are not studying over summer. So, taking two or three months of their summer to pick fruit will have no effect on how long it takes those students to graduate. The opportunity cost of fruit picking is fairly low for undergraduate students - these students give up time that they could have spent on summertime leisure pursuits, or for most of them, in some other employment.

In contrast, a PhD student is undertaking a sustained period of self-directed study (under the supervision of a panel of academic staff). If a PhD student takes two or three months off to pick fruit, then that means it will take them two or three months longer to complete their thesis. The opportunity cost of fruit picking is that the student potentially gives up three months of much higher earnings that they could have achieved after they have completed their PhD. Sure, those higher earnings don't happen until up to three years later, but no one's discount rate is so high that a barely-above-minimum-wage fruit picking job is a superior alternative. On top of that, many international PhD students are spending time away from their family, and taking longer to complete their thesis means more time away.

I'm sure that some students will be looking for work over summer, and some of those students will end up working in the horticulture industry. But PhD students should not be among them, and the University of Auckland should know better.

Climate and internal migration in Kiribati, and what that might tell us about climate refugee flows

I've posted a few times about the effect of climate change on migration, including on my own research about the effects of climate change on internal migration in New Zealand. I'm often asked about how climate change is going to affect international migration to New Zealand, and whether we will face a flood of 'climate refugees' in the near future. Especially, people tend to focus on the effect of sea level rise on island nations.

There are a number of important points to make in relation to climate refugee flows to New Zealand. First, New Zealand is a long way away from the most populous places that will be most affected by sea level rise, including Bangladesh, the Mekong Delta, and the Red River delta in South and South East Asia (there are many places more distant that may be even more affected). Travelling a long distance entails a high cost that is prohibitive to most people. Second, the places that are relatively close and affected by sea level rise, like the Pacific Islands, generally do not have large populations. The most populous islands tend to also be larger and have inland areas that will be less affected by sea level rise. Migrating inland is a much lower cost alternative than migrating internationally (albeit with its own challenges). Third, even if people choose to migrate internationally, New Zealand is just one of many alternative destinations they could choose, including Australia, the United States, or other Pacific islands. Finally, if New Zealand chose to admit a large number of climate refugees on humanitarian grounds and covered the cost of their travel and settlement, that still only covers the monetary cost. People have an attachment to place, and moving away entails a psychic cost (for example, see here). That explains why many people prefer to migrate short distances rather than long distances, even when they have the means to migrate further away.

It is on the basis of those points that I make the case that climate refugee flows to New Zealand are likely to be small. There is a theoretical model underlying most of those points, and that is related to the costs of migration.

A new article by Hugh Roland and Katherine Curtis (both University of Wisconsin-Madison), published in the journal Population and Environment (sorry, I don't see an ungated version online), demonstrates the importance of costs in the migration decision, in the context of environmental change. Roland and Curtis use five-year origin-destination migration data from the Kiribati Censuses of 2005 and 2015. They set out to compare two competing environment-migration theories:

According to the traditional, dominant framework known as the environmental scarcity thesis, poor environmental conditions may prompt out-migration in search of more hospitable natural environments and better livelihoods. In contrast, the environmental capital thesis asserts that resource scarcity and limited financial means associated with poor environmental conditions may actually restrict out-migration...

Notice that the environmental capital thesis exacerbates the points I made above, in relation to migration costs. Roland and Curtis test these theories by comparing how migration rates to the main island of Tarawa have changed over time between islands that are more isolated from Tarawa, and those that are less isolated. As they explain:

Isolation dampens the migration-promoting effect of declining natural resources asserted in the environmental scarcity thesis. However, isolation exacerbates the migration-prohibiting effect of declining natural resources outlined in the environmental capital thesis. With this theoretical distinction in mind, we anticipate that the migration-incentivizing role that environmental and economic challenges play in the environmental scarcity hypothesis only pertains to contexts in which migration costs are reasonable and, associated, distances to potential destinations are short. In remote settings, the environmental capital thesis is likely the more applicable framework.

Kiribati has been experiencing acute and increasing impacts of climate change over the period Roland and Curtis study. They expect to confirm that the environmental capital thesis dominates, and indeed, that is what they find based on cross-sectional comparisons:

Analysis of migration probabilities shows that out-migration to Tarawa is higher among the least geographically isolated islands as compared with the more isolated islands... Consistent with the environmental capital thesis, probabilities of Tarawa-bound migration from the more spatially proximate North and Central Gilbert Islands in 2000–2005 are generally larger than probabilities for the more distant South Gilbert Islands... While small numbers, the direction of the differences in out-migration is consistent with the environmental capital thesis and contrasts with the environmental scarcity thesis.

Then, looking at changes over time:

At first glance, the increase in out-migration among the North and Central Gilbert Islands appears consistent with the environmental scarcity thesis: as environmental, related economic, and other conditions decline, residents migrate to new places in search of better opportunities and livelihoods. For more geographically isolated islands, however, we generally find negative changes in migration probabilities. Such declines are consistent with the environmental capital thesis: isolation exacerbates the migration-prohibiting influence of environmental degradation. The positive change in outmigration probabilities for the North and Central Gilbert Islands contrasts with the negative changes in out-migration probabilities found for most of the more isolated islands...

The differences in the changes in out-migration probabilities between more and less geographically isolated islands support the environmental capital thesis. Migration is markedly lower from more isolated islands than from less isolated islands and generally decreases during a period in which environmental and economic conditions worsened.

Migration costs are an important constraint on migration. If climate change reduces access to the resources necessary to fund migration, people will not be able to migrate, even as the climate continues to worsen. The environmental capital thesis may be thought of as a type of climate-induced poverty trap. I think that this research is also instructive in terms of wider migration flows arising from climate change in the Pacific, because this dynamic is likely to apply (perhaps even more so) in the case of international migration.

It would be really interesting to conduct a similar study looking at how Pacific international migration flows are changing over time and how isolation, or a more proximate estimate of migration costs, affects those migration flows. I would expect to see something similar, justifying my contention that we are unlikely to face a flood of climate refugees from the Pacific in the near future.

Read more:

• Climate change won't much affect internal migration in NZ
• Climate change and migration in poor and middle-income countries
• Why Tuvaluans aren't migrating due to climate change, yet