"System change is now inevitable. Either because we do something about it, or because we will be hit by climate change. '...

"We need to develop economic models that are fit for purpose. The current economic frameworks, the ones that dominate our governments, these frameworks... the current economic frameworks, the neoclassical, the market frameworks, can deal with small changes. It can tell you the difference, if a sock company puts up the price of socks, what the demand for socks will be. It cannot tell you about the sorts of system level changes we are talking about here. We would not use an understanding of laminar flow in fluid dynamics to understand turbulent flow. So why is it we are using marginal economics, small incremental change economics, to understand system level changes?"

Sunday, August 31, 2008

The Two Tailed Beast

Somebody with an interest in economics, one Tyler Cowen, a.k.a. "Marginal Revolution" gets this much right:
Make of climate models what you may, there is lots of evidence that a) biodiversity is being hammered, and b) climate change will bring desertification, drought, and possibly coastal flooding to many parts of the world, among other dilemmas. I don't have a lot of faith in the exact predictive powers of climate models, or for that matter economic models, but uncertainty about outcomes should make us worry more not less. Uncertainty usually has two tails, not just one.
Interesting comments, too. Comments off here; please comment on the referenced article.

With a tip o' the ol' fedora to John Fleck.