Climate Change and The Winner’s Curse
Over the last few years, most mainstream doubt about the existence of climate change has been quelled — just think about Al Gore, Nobel Prize Laureate — and only the most strident of zealots resist the coalescing consensus that the activities of man are adversely affecting our environment.
As a result, I was surprised and intrigued to hear from a friend over dinner recently that her boyfriend — a Harvard business school student who holds numerous science degrees, including a master’s from Cambridge — is resistant to the forecasting that appears in major scientific publications like Science and Nature.
No one’s accusing these publications of being anything less than rigorously peer-reviewed bastions of scientific research, so why disbelieve them?
My friend said her boyfriend felt that lots of good, legitimate research is done on climate change, but the publications — and the media at large — focus on the extreme, the provocative, and so it’s the most pessimistic views that end up in their pages.
This makes perfect sense: the research on the rate and reach of climate change, even if it’s all done by good scientists using sound data-collection and analysis, is likely to result in findings that fall along a distribution. But while the truth of the matter is likely found in considering the distribution as a whole, the findings on the ends are going to be the ones that stick out to journal editors as the most interesting to prospective readers.
It’s a case of the classic economic phenomenon known as The Winner’s Curse.
Let’s say there’s an auction of a good with an objective but unknown value (think fields for oil drilling, not a painting that each prospective buyer will value differently). Each buyer will estimate the value differently. Maybe they’ll each hire someone to professionally survey and appraise the good. The real value is probably around the mean estimate, but it’s the buyer with the high estimate who will buy the good, thinking the others suckers for passing on such a valuable purchase. But that buyer will almost certainly have over-valued the good. In an auction like this, you don’t want to be the winner.
Similarly, science journals are buying the articles that most highly estimate the costs of climate change — but they might be overpaying.
Tags: al gore, climate change, economics, harvard, science writing, the winner's curse