Psychic harms and property rules

Get your photons off of my lawn!

Here's Steve Landsburg:

George Johnson of the New York Times writes that:

In a saner world, where science and the law meshed more precisely, a case like Firstenberg v. Monribot would have been dead on arrival in court.

Arthur Firstenberg, you see, is suing his neighbor, Raphaela Monribot, for bombarding him with photons from her iPhone, her WiFi connection, her dimmer switches and her fluorescent bulbs (all as side effects of her ordinary use of these devices). Mr. Firstenberg believes (or claims to believe) that said photons are damaging his health — a belief with essentially no scientific basis.

Mr. Firstenberg requests $1.43 million in damages, so perhaps we should think of this as an exercise in bosonic “ka-ching” theory. The case has gone on for five years, and might be headed to the New Mexico Supreme Court. Estimated court costs so far exceed a quarter of a million.

Psychic harms of this sort have been a problem for a while. How do we decide to allow photonic transgressions that cause psychic harms but not allow other transgressions that (in thought experiments) only cause psychic harms?

Here's David Friedman's resolution, from a couple years ago, to a prior Landsburg thought experiment:

More precisely, the property rule under which I have a right to read porn [EC: despite the psychic harm potentially imposed on prudes] and you can only stop me by offering to pay me not to do so produces its result by ignoring the cost my porn reading imposes on you, since, as with the case of risks imposed by careless driving, including that cost requires an unworkable contract between all of the prudes and all of the would-be consumers of porn. The property rule under which you have a right to forbid me, or anyone else, from reading porn, produces its result by ignoring the cost your ban imposes on me, for the same reason. Neither property rule gets the cost/benefit calculation correct, but the former rule is a great deal less expensive to enforce than the latter, which is an argument for it.

What about a liability rule? That is the point at which the subjective nature of the harm comes in. It is true that, from the standpoint of economics, all harm is ultimately subjective—having my arm broken or my car dented would not be a cost under sufficiently bizarre assumptions about my preferences. But some subjective costs are a lot easier to measure externally than others. When I claim damages for my wrecked car, there are market prices out there for repairing or replacing it that provide a court with a reasonable basis for estimating the cost. When I announce that your reading of porn, or oil drilling in a wilderness I never plan to visit, inflicts large psychic harm on me, there is no such basis for checking my claim.

The photon case should use a property right rule where I have the presumptive right to emit photons (though you can pay for abatement), because it's easy to fake psychic harms from photons and it's unverifiable.

Previously:

• Thought experiments and taking harm
• Psychic externalities
• Psychic mountain harms

Psychic mountain harms

Here's an alternative scenario for Steve Landsburg's thought experiment about psychic harms.

3. Let's suppose that a mountain that you, or I, or someone we love, or someone we care about from afar, is hovered over by a helicopter in a way that causes no direct physical harm to the mountain - no injury, no rockslides, and no disturbing of the snow atop the mountain's peak. (Note: according to the account I've read, the Department of Conservation was not even aware that someone had hovered over the mountain until they read about it on the Internet some months later.) Despite the lack of physical damage, some people are shocked, appalled and horrified at the thought that the mountain was treated in this way, and suffer deep trauma as a result. Ought the law discourage such acts of hovering? Should they be illegal?

The relevant legislation is here. Presumably one might hover over the mountain by seeking the appropriate concession from the Minister, but unauthorised hovering is a summary conviction offence carrying a maximum fine of $5000.

The psychic harms imposed by hovering are potentially large, unknowable, and easily overstated; the psychic benefits provided by hovering are potentially large, unknowable, and easily overstated. Solving for the correct solution using David Friedman's framework is left as an exercise for the student.

Minimum wages and climate change

Stephen Gordon wants to construct a Venn diagram showing the proportion of people who accept the evidence on minimum wages (it's a poor way of helping the poor) and who also accept the evidence on global warming (the place does seem to be getting warmer); he expects the intersection to be disappointingly thinly populated.

I can't help him out exactly, but I can add a bit.

The 2008 New Zealand Election Survey asked whether the government should control wages and whether strong action is needed on global warming, but had no questions on the employment effects of minimum wages. It's not the best: maybe some folks want maximum wages but don't like minimum wages, and maybe some (like me) are happy to take the evidence on global warming but are less convinced we need to invest massive resources in mitigation today - I'd have been somewhere between neutral and support on that question.

Here's the raw cross-tab.

Those who accept the science on government wage controls should oppose or strongly oppose them; those who deny the science on government wage controls will be more likely to support or strongly support them.

There are 1,471 of 2,892 respondents who accept the science on wages and 542 of 2,892 who reject it. Among those accepting the science on wages, 46.6% support or strongly support government action on global warming while 27% oppose or strongly oppose it. Among those neutral or opposed to the science on wages, 60.4% support or strongly support government action on warming while 15.2% oppose or strongly oppose it. These hit the 7+ t-stats. So disagreeing with the science on wages seems to predict stronger support of climate policy.

Among those supporting or strongly supporting strong government action on global warming, 45.8% accept the science on wages and 22.9% reject it. Among those neutral or opposed to strong action on climate, 59.7% accept the science on wages while 12.9% deny it. The t-stats on these across groups are higher than 7.

So if those supporting government action on climate are more likely to have supported the science, those supporting climate science seem significantly less likely to accept the science on wages and significantly more likely to reject the science on wages. And supporting the science on wage controls correlates with lower support for government action on climate and stronger opposition to it.

It's not a pure test because it's not anti-science to say that the scientists are right about mean expected warming over the next century but still to oppose "strong action" because you don't think it passes cost-benefit analysis. But you'd expect that there'd at least be a positive correlation between accepting the science and wanting action - it would seem odd to want action on climate change while thinking there's no warming.

The survey also has a measure of self-reported ideology: 0 left, 9 right, 5.4 mean. Another fun fact: dropping all the "don't know" respondents, mean self-reported ideology is 5.5 among those accepting wage science and 5.2 for everyone else; mean reported ideology among those wanting strong action on climate change is 4.8 and 6 for everyone else. The t-stat on group differences in ideology on climate is 11.9; on wages, 3.6. So the ideological divide on climate policy seems greater than that on wage controls.

I'd previously put together a couple of factor scores pulling together responses on social questions to get a measure of social liberalism and one on economic questions to get a measure on economic liberalism. I'd left the climate action question out of both factor analyses because supporting "action" on climate is neither pro- nor anti-market.* So I have a mean zero, SD 1 measure on social liberalism (higher is more liberal) and on economic liberalism (higher is more liberal).

A couple quick and dirty specifications have social liberalism strongly predicting support for climate policy, economic liberalism strongly predicting opposition to climate policy, household income not affecting preferences, and education predicting increased support for climate policy. In the ordered logit specification, a standard deviation increase in social liberalism predicts a 0.41 standard deviation increase in support for climate policy; a standard deviation increase in economic liberalism predicts a 0.6 standard deviation decrease in support for climate policy; a standard deviation increase in education predicts a 0.17 standard deviation increase in support for climate policy. There aren't any other measures in there that could capture generalised attitudes towards science, alas.

There are plenty of reasons why economic liberals could come out less in favour of strong action on climate change. A few candidates, some better than others:

1. Accept the science, but reckon future mitigation is more likely to pass cost-benefit, or that other projects are more worthwhile (a la Lomborg). Or, in stronger form, accept the science, be sceptical about the prospects for policy to fix things, and recognise that a warmer world could well be a better world up through, say, three degrees of warming. David Friedman makes the best argument along these lines** (his earlier blog post here). I don't think anybody who grew up in Manitoba can deny that there are some positive effects from a gradual warming.
2. Accept the science, see a need for policy, but reckon that the "strong action" mentioned in the question means something more than the standard economic advice of a revenue-neutral carbon tax that can ramp up over time.
3. Accept/agnostic on the science, but see that most of the folks shouting loudest for climate action are a bit nuts on other economic issues and be hanged if you'd ally with them - heck, some seem to think that reduced economic growth is a feature rather than a bug of some climate policies. And the same bunch that shouts about global warming also reckoned that peak oil was a serious concern - which was utterly insane given that, if peak oil had been right, it would have been a part of the solution to warming! As David Friedman put it: even if there were zero evidence of global warming, many of the proponents of anti-warming policies would still support those policies, but on other grounds. 
4. Reject the science: the loudest proponents are completely wrong on the economic issues you know something about, and really seem to have worked backwards from "policies I support" to "the data must have said X" in assessing things on those margins, so you can't reject that they've done the same here. Note that this is stronger than the explanation immediately prior: it says that the scientists are part of some kind of conspiracy.
5. Reject the science: macroeconomic models are a bit nuts, and climate change models have all the nuttiness of some of the big macro models but with even more uncertainty about cloud feedback loops. If economists can barely get a consensus on the government spending multiplier, how can we trust coefficients on climate sensitivity? And if sensitivity were scary bad, how did the planet ever manage not to turn into Venus a few million years ago? Sure, the models look ok over the period of calibration, but their out-of-sample predictions of warming in the 2000s weren't all that great. Until the models can figure out why warming leveled off in the 2000s, should we really trust what they say about 2150? 
6. Pure mood/expressive affiliation, or that in combination with that pretty much every other prediction of global doom has been rather wrong.

I'm personally somewhere between 1 & 2: a low carbon tax capable of being ramped up over time could slow the pace of warming, giving more time for adaptation, and helping to guard against the scarier warming scenarios.***  I suspect that some of the opposition to climate science among those who are not climate scientists and who are not in a position to personally evaluate the quality of the literature comes from 4 & 6.

There's a reasonable contingent of pro-market people**** who are happy to take the science on climate and figure a revenue-neutral carbon tax isn't all that bad. Would that more of the pro-climate-policy crowd would come over to the intersection of Stephen Gordon's Venn diagram. It's mildly frustrating that the New Zealand Green Party excoriates those opposed to rather strong action on global warming as anti-science while rejecting the consensus views of economists on economic policy.

* Club Pigou is pro-market; Club ban-everything-that-emits isn't. Note that the appropriate domain of Club Pigou ought to be bounded.

** The first half-hour of the linked Friedman video provides a wonderful exposition of how economists think about externality and policy; strongly recommended.

*** I take David Friedman's point on that the Nordhaus / Weitzman insurance argument for climate policy is flawed where it considers fat tail risks of doing nothing while ignoring fat tail risks of doing something. But if the main potential low-probability high-cost risk of emitting too little is another ice age, it seems easier to ramp up CO2 emissions if things look like they're heading that way than it would be to remove CO2 that's already been emitted.

**** Did I mention Club Pigou?

Warm houses in cold climates, dead stock in warm paddocks

Most of us are familiar with David Friedman's beautiful application of fixed and marginal costs to housing. If you live in a warm climate, you spend not too much on insulation. The marginal cost of increasing the internal temperature is then higher, so you keep your house cooler. If you live in a cold climate, you have to incur the insulation cost because the alternative is likely freezing to death indoors. The marginal cost of heating is then lower and so you'll have warm houses in cold climates and cold houses in warm climates.

New Zealand lamb farmers are currently experiencing massive stock losses due to a big snowstorm down south. This isn't exactly unprecedented; it seems like every second or third year since we've been here, there's been a big snow storm during lambing somewhere in the country that has killed a bunch of lambs and ewes. This one seems worse than prior years' though.

These pretty heavy stock losses always puzzled me a bit. I grew up on a mixed farm in southern Manitoba. Our beef cattle calved out starting around the third week in February and finishing in March. If calving went later, then there'd be elevated risk of scours for the calves with the mucky spring thaw and variable temperatures - the calves needed to strengthen up a bit before the spring. And so the first calves often were born on very cold February nights. Daytime highs of -20 celsius or worse; nighttime lows of -40 celsius weren't completely uncommon, though -30 was more typical.

But we never had stock losses like the farmers here have with snowstorms. With about 50 or 60 cows calving out in a season, we might have gotten two or three calves that didn't make it; those deaths were far more typically due to the cow lying on the calf or strangling during an unattended birth than to being born in a snowbank at -40. Here, it's likely hundreds of thousands of lambs that are dying in the snow. Why? Friedman's story. Because the weather was on average terrible, we had to use practices adapted to it. The young cows stayed in a corral near the barn where they could be quickly attended to if things went wrong; the more experienced cows were in another corral also close to the barn. They were all on straw bedding with lots of good hay and alfalfa (lucerne). If they weren't, they'd all have frozen or starved to death in the pastures. So the marginal cost of ramping things up a bit on a really cold night - putting out more fresh straw bedding and being extra sure to go out two or three times overnight if a cow was due instead of once or twice - wasn't that high. But the farmers here have all their stock out in paddocks far from help. The marginal cost of getting them to a paddock close to the house in the very short notice before a serious snowstorm is high, and keeping them all on hay close to the house would waste a lot of winter paddocks.

And so you get dead stock in warm paddocks and relatively happy cows at -40.

It's likely all optimal. But I wonder whether having adapted to this kind of agricultural practice hasn't helped make things like Crafar more likely.

Hanson on Slavery

Robin Hanson lists three cases in which he could support slavery:

• Tyler Cowen tells me very poor parents in Haiti today sometimes sell their kids into slavery, expecting such kids to at least be fed. Its sad some people are that poor, but given that they are, this seems a good option to have.
• To make punishing criminals cheaper, instead of prison I could support auctioning off the right to use criminals as slaves for so many years.
• I’d accept private law contracts, if entered into with sufficient solemnity, specifying slavery as a penalty under particular circumstances.

I'd demur on the second: I worry about the incentives facing the government to create more criminals when they have a pecuniary interest in doing so. David Friedman makes the same point in Law's Order:

All of these examples [Friedman's from the chapter, not Hanson's] demonstrate a common problem - the effect of efficient punishment on the incentives of enforcers, public (civil forfeiture and BATF entrapment] or private. The same institutions that, seen from the perspective of a philosopher-king model of law enforcement, produce an unambiguous improvement by lowering the cost of enforcing the criminal law have the potential, seen from a perspective of rational self-interest, to set off a costly rent-seeking struggle, a war of each against all, with each side trying to use legal institutions to expropriate others and avoid being expropriated.