tag:theconversation.com,2011:/ca/topics/future-discounting-8301/articlesFuture discounting – The Conversation2015-08-27T05:54:08Ztag:theconversation.com,2011:article/464702015-08-27T05:54:08Z2015-08-27T05:54:08ZTeens sue Obama over climate, asking why future generations’ rights are not respected<p>This month’s decision by 21 young American citizens, mostly teenagers, to <a href="http://ourchildrenstrust.org/sites/default/files/15.08.12YouthComplaintAgainstUS.pdf">sue President Barack Obama and various branches of the US government</a> over climate change has highlighted a crucial issue that is all too often overlooked: the tendency to value current generations’ well-being much more highly than that of future generations.</p>
<p>The “youth plaintiffs”, aged between 8 and 19, argue that the US government has known for more than 50 years that carbon dioxide from fossil fuels is causing dangerous climate change, and yet has not prevented emissions from rising. </p>
<p>Their lawsuit – filed in an Oregon district court and directed at Obama, the Department of Energy, the Department of State, the Environmental Protection Authority and others – argues that future US generations will disproportionately bear the cost of a destabilized climate, despite having the same constitutional right to freedom from harm as current generations.</p>
<p>They are aiming to obtain a federal court order that would require the government to develop a plan to protect the atmosphere and climate system. Lead counsel Julia Olson <a href="http://ourchildrenstrust.org/sites/default/files/15.08.12FederalClimateLawsuitPressRelease.pdf">said</a> that the US federal government: </p>
<blockquote>
<p>…has a constitutional responsibility to leave a viable climate system for future generations. The Government has consciously chosen to endanger young people’s right to a stable climate system for the short-term economic interests of a few… This administration must no longer consign future generations to an uninhabitable planet.</p>
</blockquote>
<h2>Current science, future impacts</h2>
<p>The likely impact of climate change on future generations was set out by the <a href="http://nca2014.globalchange.gov">2014 US National Climate Assessment</a>, which said that the overall weight of evidence “confirms that climate change is affecting the American people now, and that choices we make will affect our future and that of future generations”. </p>
<p>The plaintiffs argue that: </p>
<blockquote>
<p>…a substantial portion of every ton of CO<sub>2</sub> emitted by humans persists in the atmosphere for as long as a millennium or more. Therefore, the impacts associated with past and current CO<sub>2</sub> emissions will be borne by our children and future generations. Our nation will continue to warm in response to concentrations of CO<sub>2</sub> from past emissions, as well as future emissions.</p>
</blockquote>
<p>The wider point is that the impacts are likely to be worse for future generations, but in deciding what to do about it now, their interests tend to be discounted in favour of current generations. </p>
<h2>Putting a price on the future</h2>
<p>In the popular discourse about climate change, it is rare to hear anyone talk about “discounting”. But it is a crucial concept in considering what climate action our society should take. </p>
<p>Current generations bear a responsibility for the well-being of future generations – a point firmly made by the young plaintiffs in their legal action against the US government. But how do we weigh up the size of this future debt?</p>
<p>The “discount rate” weighs future people’s benefits against costs borne by people in the present. Thus it is a measure of how highly societies <a href="http://press.princeton.edu/titles/9894.html">value their future</a>. </p>
<p>If a cost-benefit analysis uses a high discount rate, it discounts future benefits to a high degree, giving little weight to the interests of future people – perhaps on the basis that those future people will be cleverer and/or richer than us and can presumably look after themselves. This is broadly the approach set out by Yale economist William Nordhaus in his books <a href="http://www.amazon.com/Question-Balance-Weighing-Options-Policies/dp/0300137486/ref=sr_1_1?s=books&ie=UTF8&qid=1440565100&sr=1-1&keywords=nordhaus+question+of++balance">A Question of Balance</a> and <a href="http://yalepress.yale.edu/book.asp?isbn=9780300189773">The Climate Casino</a>. </p>
<p>In contrast, the British climate economist Nicholas Stern, in his <a href="http://www.webcitation.org/5nCeyEYJr">2006 review of climate economics</a> and in his 2015 book <a href="https://mitpress.mit.edu/books/why-are-we-waiting">Why Are We Waiting?</a>, uses a low discount rate, effectively asking the present generation to make urgent sacrifices for the sake of future people.</p>
<p>The US economist and Court of Appeals Judge Richard Posner <a href="https://global.oup.com/academic/product/catastrophe-9780195306477">agrees</a> that there is a strong case for taking costly measures now. But he also notes that there is no objective guide to the weight that should be given to the welfare of future generations.</p>
<h2>The costs of caring for the future</h2>
<p>The fiendish issue here is that even if we can reach a deal to reduce greenhouse emissions now, people living in the future will benefit, not those living today. But we, today, will bear the costs of reducing those emissions. Thus there is a temptation to apply a high discount rate to protect current interests, rather than a lower one that might protect those in the future. </p>
<p>University of Oxford philosopher John Broome <a href="http://www.amazon.com/Climate-Matters-Ethics-Warming-Norton/dp/0393063364/ref=tmm_hrd_title_0">sees it like this</a>: </p>
<blockquote>
<p>(The current generation) will be sacrificing some of its own well-being for the sake of greater well-being that will come to people far in the future. Is the sacrifice worthwhile? Does it improve the world on balance? This is a question of weighing: How do increases in future well-being weigh against sacrifices of present well-being?</p>
</blockquote>
<p>The US plaintiffs, who will be middle-aged by mid-century, want those future interests protected. That is why they are <a href="http://ourchildrenstrust.org/sites/default/files/15.08.12YouthComplaintAgainstUS.pdf">calling</a> for “an enforceable national remedial plan to phase out fossil fuel emissions … so as to stabilize the climate system and protect the vital resources’ on which the young Americans now and will depend”.</p>
<p>These 21 young Americans have thrown the issue of <a href="http://press.princeton.edu/titles/9894.html">pricing the planet’s future</a> into stark relief. It is a question that truly resonates through the generations.</p><img src="https://counter.theconversation.com/content/46470/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The US government is being sued by teenagers who say it hasn’t done enough to protect future generations from climate change. The case raises the crucial question of how we weigh up society’s future rights.David Hodgkinson, Associate Professor, The University of Western AustraliaRebecca Johnston, Adjunct Lecturer, Law School, University of Notre Dame AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/422602015-06-01T05:15:16Z2015-06-01T05:15:16ZThree problems with the way we think about nuclear power<figure><img src="https://images.theconversation.com/files/83481/original/image-20150601-17799-1u5b5rp.jpg?ixlib=rb-1.1.0&rect=730%2C279%2C2500%2C1954&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">This sign might actually be appealing to treasure hunters in the distant future.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/alanenglish/6513573007/in/photolist-aVzLjT-edPEPf-6qxFCb-26Kvo9-6w5v1r-eeZcZ6-8a5gkz-tRZ8zS-akqGBe-2YSGsX-27XYbJ-5YsFwa-atCLkS-ci8rWG-33fGbC-cR1uY9-6gqqsy-26LgNG-7hiiAB-bPN8Gr-iXQofo-adf1e-84BVNG-6MjhUR-oaJ3KT-8JPjFF-8bLmq6-7z849N-iXSaZu-26FLb8-6WVNVj-6NjKz-9JAHdE-68w2Vx-26JT9X-26FJqK-26FMkZ-26JSD2-7eoJFo-7T2kex-2dvqZ2-BGAv8-27XXbh-hJTnC-hsXmbU-27XXGQ-8qEC7w-87JxeB-dUoYFQ-cXzGqC">Alan English CPA/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>The future does not exist, at least not in the same way the past exists. From an evolutionary perspective, one might say there is no future in looking too far ahead. And perhaps not surprisingly, we are not very good at looking into our own distant future. </p>
<p>In human infants, for example, the concept of the future takes much <a href="http://www.ingentaconnect.com/content/els/00163287/1998/00000030/00000009/art00093">longer to crystallise</a> than the concept of the past. Memory develops well into the teenage years, but children already “get” the past at around two years old. </p>
<p>When we ask a four-year-old what they are going to do next week, let alone when they grow up, they lean on “script-based” knowledge (“it’s my birthday next week, so I’m going to get presents!”). Even as adults, we have no clear script for the future. </p>
<p>This is one of three fundamental problems that make it hard for us to sensibly think about nuclear power, whether we support or oppose it. Our natural difficulties thinking about the future, probabilities and risk all contribute to problematic attitudes towards nuclear power.</p>
<h2>The triple crown of cognitive challenges</h2>
<p>I had close contact with the mindset of both sides of the nuclear argument when I worked as a young journalist with a strong environmentalist leaning. And again later as a researcher working on a British Nuclear Fuels-funded <a href="https://www.researchgate.net/profile/Olav_Muurlink/publications">project</a> at the University of St Andrews, looking at our willingness to pay to avoid the relatively tiny probability of a particular nuclear accident. </p>
<p>Not surprisingly, I began a PhD on self-deception at St Andrews, impressed by how invisible our cognitive shortcomings are to ourselves. </p>
<p>My research gave me an understanding of the thick lenses we need to peer into the future as well as our completely ingrained inability to understand probability, which is a key concept in understanding nuclear power. It’s a shortcoming common to experts and lay people alike, and one that can’t be completely eliminated by education. </p>
<h2>Future tense</h2>
<p>Nuclear power involves the future in ways that fossil fuels don’t. In the 1990s, <a href="http://www.sciencedirect.com/science/article/pii/S0040162597000759">four interdisciplinary teams of scientists</a> were assembled to look at the possible risk of future human intrusions into nuclear waste in the “deep future”, as far as 10,000 years hence – less than half the 24,000 year half-life of <a href="http://www.nrc.gov/reading-rm/doc-collections/fact-sheets/plutonium.html">plutonium</a>. </p>
<p>Amongst the themes the four groups debated was how to avoid the future loss of memory about nuclear waste. Centuries after we bury nuclear waste, will we remember why we buried it, let alone where we buried it? </p>
<p>Amongst the scenarios they canvassed was a team of treasure hunters hearing myths of something valuable buried in New Mexico, delightedly discovering ancient “warnings” like skulls and cross-bones as a sure sign they are on the path to buried treasure.</p>
<p>We find it hard to imagine the future or keep it in mind. <a href="http://www.psych.wustl.edu/learning/McDaniel_Lab/Prospective_Memory.html">Prospective memory</a> is the ability to remember to do something, a field much less well understood than retrospective memory. </p>
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<a href="https://images.theconversation.com/files/83489/original/image-20150601-17799-buievb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/83489/original/image-20150601-17799-buievb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/83489/original/image-20150601-17799-buievb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/83489/original/image-20150601-17799-buievb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/83489/original/image-20150601-17799-buievb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/83489/original/image-20150601-17799-buievb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/83489/original/image-20150601-17799-buievb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/83489/original/image-20150601-17799-buievb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Nuclear waste last a very long time, and we often struggle to think over such time scales.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/markgallagher/74160504/in/photolist-7y6ko-8S7h3J-bXoxUT-9vzvQE-9vwu2r-96bZEf-dar41N-bXoxWT-ceL6Zd-bXoxW2-ceL6Yu-bXoxVx-ceL6YA-bXoxUZ-ceL6Zo-bXoxVH-ceL6Yo-ceL6Zh-dar42b-darcdi-G4r8p-y13sK-6utBvo-Dq9dU-bixSov-dar42L-G4r8r-G4r8v-oDXn8D-32faYu-darceT-darcee-8gVk4Y-X7Ej-7E2Fao-5RH9MU-3ECfY-6nDAMR-9JHsp-5cuF1T-8H3D9y-darcdH-2kLEu4-darccD-2jE2rJ-gRzQTK-9xWhLV-8a5irJ-aBV88C-7Tx3yN">mark gallagher/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>To remember to put the rubbish out – nuclear or otherwise – is something that takes time to develop. And it appears to take greater cognitive effort than remembering the past. However, prospective remembering can be sharply enhanced by associating successful prospective remembering with personally relevant rewards for remembering to remember. And that’s part of the problem. </p>
<p>The scripts that we can develop about the future take more effort and are far weaker than the ones we develop about the past. Prior to an earthquake, it’s hard to sell earthquake insurance. But sales boom after the crisis and taper away only gradually afterwards. </p>
<p>We do not treat our future selves as well as we treat our current selves, let alone future generations, simply because they are less real to us. <a href="http://www.psych-it.com.au/Psychlopedia/article.asp?id=427">Temporal discounting</a> is the tendency to value rewards/punishments less the further they are in the future. It is powerful even in the space of one’s own lifetime. Even teenagers wouldn’t smoke if the chance of lung cancer was shifted to their early twenties.</p>
<h2>Risky thinking</h2>
<p>Another aspect of our thinking that can muddle our thoughts about nuclear power is the human capacity to hope. Take a typical study of how we perceive threat. A small 1986 <a href="http://www.osti.gov/scitech/biblio/5070426">examination of American attitudes</a> toward the threat of nuclear war, for example, found that less than a quarter of subjects were optimistic about the threat to the world. </p>
<p>However, oddly, 50% predicted peace for North America, while an even more comforting 80% regarded their own chances within America as better than average. </p>
<p>Flip the issue of risk around to positive issues – the chance of winning a lottery prize, for example – and the very opposite pattern occurs. We stubbornly believe in magic <a href="http://www.slate.com/articles/health_and_science/science/2011/05/prophecy_fail.html">even when we know it isn’t true</a>. </p>
<p>The work of Daniel Kahneman and Amos Tversky supports the notion that risks and opportunities are perceived differently, and that experts and lay people alike suffer from these biases, and much of their original research was based on <a href="http://us.macmillan.com/thinkingfastandslow/danielkahneman">pools of experts</a>, not the general public.</p>
<h2>Probably wrong</h2>
<p>This is partly about motivation: we do want to believe in positive things about ourselves, and don’t want to believe negative things. A more fundamental problem about the issue of risk is that we also do not understand probability well. Whether you conduct experiments with people or rats, probability impacts on us like uncertainty. </p>
<p>It is not only a problem of humanity’s propensity for hope. Studies have found that even those with proficiency in probability theory consistently behave as if they misunderstand low probabilities. </p>
<p>“Erroneous intuitions resemble visual illusions in that they remain compelling attractive even when the person is fully aware of their nature,” wrote Kahneman and Tversky on the <a href="http://www.researchgate.net/publication/235103436_Intuitive_Prediction_Biases_and_Corrective_Procedures">stubbornness of expert fallacies</a>. The reason why even experts can’t rationally use probability when it comes to the future is that it would be psychologically counterproductive to do so. </p>
<p>Depressed individuals are known to have <a href="https://www.researchgate.net/profile/David_Fresco/publication/227708596_Depressive_realism_a_meta-analytic_review/links/0fcfd500162b4821ca000000.pdf">more accurate self views</a> because some aspects of the future are absolutely true yet downright depressing, such as the prospect of dying. </p>
<p>So thinking about nuclear power evokes the perfect cognitive storm of considering <em>probability</em> about <em>risk</em> in the distant <em>future</em> – three things we do not intuitively understand well. </p>
<p>This does not mean we should leave decision making about nuclear power to the experts. It means that we should monitor even experts very carefully to ensure they are not making horrible, but very human, mistakes on our behalf.</p><img src="https://counter.theconversation.com/content/42260/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Olav Muurlink previously received funding from the British government and British Nuclear Fuels Limited for work that lead in part to this article. He is chair of the management committee of Co-operation in Development.</span></em></p>Our natural difficulties in thinking about the future, low probabilities and considering risk make many of our views about nuclear power problematic.Olav Muurlink, Senior Lecturer, organisational behaviour, management, CQUniversity AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/301572014-08-11T20:25:05Z2014-08-11T20:25:05ZThomas Piketty, climate change and discounting our future<figure><img src="https://images.theconversation.com/files/55770/original/2jnwjx3j-1407219362.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Economist Thomas Piketty has warned "climate change cannot be eliminated at the stroke of a pen".</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/40285098@N07/5665816965/in/photolist-7K4jVg-niKZFc-oaq5R6-oaAmk5-9CHHfh-9CEMCn-9CEMZp-9CHGRu-nT8RvT-ocwgiX">Parti Socialiste du Loiret/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>French economist <a href="https://theconversation.com/topics/thomas-piketty">Thomas Piketty</a> and his book <a href="http://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/067443000X/ref=sr_1_1_title_2_har?s=books&ie=UTF8&qid=1402906558&sr=1-1&keywords=capital">Capital in the Twenty-First Century</a> are a <a href="https://theconversation.com/coming-to-an-arena-near-you-economists-the-new-rock-stars-28496">global publishing phenomenon</a>. </p>
<p>But while Piketty’s writing on wealth inequality has been <a href="http://www.nytimes.com/2014/05/31/upshot/everything-you-need-to-know-about-thomas-piketty-vs-the-financial-times.html?_r=0">widely debated</a>, far fewer people know that he has some useful things to say about climate change and public capital.</p>
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<a href="https://images.theconversation.com/files/55771/original/2dh94gng-1407219494.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/55771/original/2dh94gng-1407219494.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/55771/original/2dh94gng-1407219494.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/55771/original/2dh94gng-1407219494.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/55771/original/2dh94gng-1407219494.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/55771/original/2dh94gng-1407219494.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/55771/original/2dh94gng-1407219494.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/55771/original/2dh94gng-1407219494.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="https://www.flickr.com/photos/swanksalot/13984456397/in/photolist-7K4jVg-niKZFc-oaq5R6-oaAmk5-9CHHfh-9CEMCn-9CEMZp-9CHGRu-nT8RvT-ocwgiX">Seth Anderson/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
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<p>In particular, Piketty discusses the discount rate and the differences in approach between <a href="http://www.cambridge.org/au/academic/subjects/earth-and-environmental-science/climatology-and-climate-change/economics-climate-change-stern-review?format=PB">Lord Nicholas Stern</a> and Yale economist <a href="http://cowles.econ.yale.edu/books/nordhaus/balance.htm">William Nordhaus</a>.</p>
<p>The discount rate weighs future people’s benefits against costs borne by present people. It is the key to understanding action on climate change. The different views of Stern and Nordhaus go to the heart of how the planet addresses the climate change problem.</p>
<h2>Pay now or later? And at what cost?</h2>
<p>It seems to me that the main issue in terms of addressing the climate change problem is that, if we agree to reduce emissions now – and there is currently no global agreement in sight that provides for such reduction – people living in the future will benefit, not those living today. But we will, today, bear the costs of reducing such emissions. </p>
<p>Stern in <a href="http://www.cambridge.org/au/academic/subjects/earth-and-environmental-science/climatology-and-climate-change/economics-climate-change-stern-review?format=PB">The Economics of Climate Change</a>, better known as the Stern Review, concludes that strong action on climate change is urgently required; Nordhaus’s view is not so much. Nordhaus thinks climate change requires only a modest response now, with more significant action delayed for decades (read more in <a href="http://cowles.econ.yale.edu/books/nordhaus/balance.htm">A Question of Balance</a> and <a href="http://yalepress.yale.edu/yupbooks/book.asp?isbn=9780300189773">The Climate Casino</a>).</p>
<p>The discount rate accounts for these different approaches. It weighs future people’s benefits against costs borne by people in the present. If a cost benefit analysis uses a high discount rate, it discounts future benefits to a high degree, giving little weight to the interests of future people – on the basis that future people will be cleverer, richer and they’ll work it out (the Nordhaus approach). In contrast, Stern uses a low discount rate, and asks the present generation to make urgent sacrifices for the sake of future people.</p>
<h2>Piketty’s take on discount rates</h2>
<p>Piketty views Stern’s opinion as more reasonable. He argues, though, that more urgent need is: </p>
<blockquote>
<p>to increase our educational capital and prevent the degradation of our natural capital. This is a far more serious and difficult challenge, because climate change cannot be eliminated at the stroke of a pen (or with a tax on capital)</p>
</blockquote>
<p>He <a href="http://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/067443000X/ref=sr_1_1_title_2_har?s=books&ie=UTF8&qid=1402906558&sr=1-1&keywords=capital">asks</a> whether we really know what we should invest in and how we should organise our response to the challenge. Should we “count on advanced research to make rapid progress” in renewable energy, or should we immediately impose limits on carbon consumption? Piketty’s view is that no one knows how these challenges will be met or the role of governments “in preventing the degradation of our natural capital in the years ahead”.</p>
<p>And no one does know. Piketty’s uncertainty is shared by Oxford’s John Broome, who <a href="http://www.amazon.com/Climate-Matters-Ethics-Warming-Norton/dp/0393063364/ref=tmm_hrd_title_0">notes</a> the current generation: </p>
<blockquote>
<p>will be sacrificing some of its own well-being for the sake of greater well-being that will come to people far in the future. Is the sacrifice worthwhile? Does it improve the world on balance? This is a question of weighing: How do increases in future well-being weigh against sacrifices of present well-being?</p>
</blockquote>
<p>Put another way, these questions highlight why the market may fail to adequately address the climate change problem. As Harvard’s Martin Nowak <a href="http://news.harvard.edu/gazette/story/2014/06/tomorrow-isnt-such-a-long-time/">says</a>: “Even if you want to cooperate with the future, you may not do so because you are afraid of being exploited by the present”.</p>
<p>The prevailing view at the international level about action on climate change seems to be, “Why should I care about future generations? What have they ever done for me?” And it’s those views about what future generations are worth that will determine climate change policy in 2014 and beyond.</p>
<h2>Smoke, mirrors – and emissions trading</h2>
<p>A larger question that Piketty doesn’t address is the usefulness of emissions trading schemes. </p>
<p>But it is a a question addressed in another important – albeit less famous – book, Philip Mirowski’s <a href="http://www.amazon.com/Never-Serious-Crisis-Waste-Neoliberalism/dp/1781680795/ref=sr_1_1?s=books&ie=UTF8&qid=1402908278&sr=1-1&keywords=never+let+a+serious+crisis+go+to+waste">Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown</a>, published late last year. </p>
<p>Mirowski <a href="http://www.amazon.com/Never-Serious-Crisis-Waste-Neoliberalism/dp/1781680795/ref=sr_1_1?s=books&ie=UTF8&qid=1402908278&sr=1-1&keywords=never+let+a+serious+crisis+go+to+waste">offers</a> a powerful critique of neoclassical economics. He argues that, for neoliberals, humans can never be trusted to know whether the environment is in crisis or not because:</p>
<blockquote>
<p>both nature and society are dauntingly complex and evolving; therefore, the neoliberal solution is to enlist the strong state to allow the market to find its own way to the ultimate solution.</p>
</blockquote>
<p>Emissions trading is a an elaborate “<a href="http://en.wikipedia.org/wiki/Bait-and-switch">bait-and-switch</a>” strategy, in which politicians are diverted from an original intention to reduce emissions into the endless technicalities of instituting and maintaining markets for carbon permits. The not unintended consequence is that the level of emissions continues to grow apace.</p>
<p>Once emissions trading is established, lobbying and “financial innovation” results in excess emissions trading permits and offsets, such that any cap on emissions never prevents emissions from growing. Mirowski argues that the “engineered glut of permits” – as we’ve seen with <a href="http://carbonmarketwatch.org/wp-content/uploads/2014/07/ETS-POLICY-BRIEF-JULY-2014_final_.pdf">the European Union’s emissions trading scheme, a problem Europe is now struggling to solve</a> – is not temporary, as unused or excess permits can be banked for future use. </p>
<p>It’s well understood, Mirowski <a href="http://www.amazon.com/Never-Serious-Crisis-Waste-Neoliberalism/dp/1781680795/ref=sr_1_1?s=books&ie=UTF8&qid=1402908278&sr=1-1&keywords=never+let+a+serious+crisis+go+to+waste">continues</a>, that emissions trading stifles technological innovation to curb emissions. Funds that ordinarily might have been used to alter energy infrastructure are “pumped into yet another set of speculative financial instruments, leading to bubbles, distortions of capital flows, and all the usual symptoms of financialization”.</p>
<p>For Mirowski, emissions trading does not curb global warming because it was never intended to do so; in practice, emissions trading – carbon permit trading – does not reduce emissions. Global experience to date might suggest that this is, in fact, correct.</p>
<h2>Why this debate about the future matters now</h2>
<p>Discount rates and emissions trading, of course, have present policy relevance. </p>
<p>At the end of next year in Paris, the world will meet to discuss whether developed and developing states alike will agree to emissions reduction targets from 2020 on.</p>
<p>In my view, the odds of such an agreement are about as good as seeing another Piketty proposal - a modest global tax on wealth - come true. Piketty understands such a proposal is “utopian”.</p>
<p>But in the meantime, in the United States the Environmental Protection Agency recently <a href="http://www2.epa.gov/carbon-pollution-standards">issued draft guidelines</a> on fossil fuel power plants, and has set a national target of a 30% reduction in carbon emissions from such plants by 2030 on 2005 levels. </p>
<p>Under the EPA plan it’s left up to individual US states to set their own emission reduction targets and how to meet those targets. And, at the state level, emissions trading schemes appear to be the preferred option. The <a href="http://www.rggi.org/">US Regional Greenhouse Gas Initiative</a> is an emissions trading scheme comprising nine northeastern states. <a href="http://www.arb.ca.gov/cc/capandtrade/capandtrade.htm">California</a> also has an emissions trading scheme. </p>
<p>Apart from the EU, a number of <a href="http://www.worldbank.org/en/news/feature/2014/05/28/state-trends-report-tracks-global-growth-carbon-pricing">developed and developing states around the world</a> have also set up emissions trading schemes, including New Zealand, parts of China, Kazakhstan, Quebec and elsewhere. </p>
<p>These emissions trading schemes offer some hope that, together with other action, “bottom-up” approaches might result in an alternative to international action on emissions reductions.</p><img src="https://counter.theconversation.com/content/30157/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Hodgkinson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>French economist Thomas Piketty and his book Capital in the Twenty-First Century are a global publishing phenomenon. But while Piketty’s writing on wealth inequality has been widely debated, far fewer…David Hodgkinson, Associate Professor, Law School, The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/210372013-12-10T14:49:51Z2013-12-10T14:49:51ZThe science of dread: anticipating pain makes it worse<figure><img src="https://images.theconversation.com/files/37048/original/q8pj5gwv-1386271372.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">figure</span> </figcaption></figure><figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/37025/original/vk3gx8my-1386237815.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/37025/original/vk3gx8my-1386237815.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/37025/original/vk3gx8my-1386237815.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/37025/original/vk3gx8my-1386237815.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/37025/original/vk3gx8my-1386237815.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/37025/original/vk3gx8my-1386237815.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/37025/original/vk3gx8my-1386237815.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Rather be in the waiting room?</span>
<span class="attribution"><span class="source">U.S. Navy</span></span>
</figcaption>
</figure>
<p>For most people, a chocolate today is better than one tomorrow. Economists refer to this as “future discounting”, where we prefer to have nice things now rather than wait and unpleasant things later rather than now.</p>
<p>But this isn’t always the case in reality. When it comes to a potentially painful experience, like having an operation, many people choose to get it over and done with rather than put it off.</p>
<p>In a new paper published in <a href="http://dx.doi.org/10.1371/journal.pcbi.1003335">PLOS Computational Biology</a>, researchers from Imperial College London and University College London explore how this reluctance to wait for pain – a feeling commonly known as dread – changes depending on the timing of the painful event. The researchers wanted to know if dread is worse when pain is more delayed. </p>
<p>The study involved a series of experiments in which pain took the form of brief electric shocks to the back of the hand of 35 participants. Over the course of the experiments, participants could choose to receive shocks soon, or delay them by a certain amount of time, which could range from a few seconds to a quarter of an hour.</p>
<p>A minority chose to wait and receive the shocks further into the future. But 71% of participants opted to receive pain sooner, even if meant it would be worse, because, in half of the experiments, choosing earlier pain resulted in more shocks.</p>
<p>The researchers also compared the size of the delay and the probability a participant would choose the later shock. They found the relationship between the two was best described by what they called “exponential dread”: the bigger the delay, the more likely it was the person would opt for the earlier shock.</p>
<p>The shock experiments were relatively brief, so researchers also looked at what happens when people can delay a painful experience much further into the future. The participants were given a hypothetical scenario, in which they had to schedule an appointment for a painful dental procedure. They were told they could have the procedure “today”, or at a fixed later time. This time varied between participants: it could be 1, 5, 13, 32, 89 or 237 days.</p>
<p>Once again, the participants’ choices suggested dread increases exponentially as people approach a painful event:</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/37048/original/q8pj5gwv-1386271372.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/37048/original/q8pj5gwv-1386271372.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=576&fit=crop&dpr=1 600w, https://images.theconversation.com/files/37048/original/q8pj5gwv-1386271372.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=576&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/37048/original/q8pj5gwv-1386271372.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=576&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/37048/original/q8pj5gwv-1386271372.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=724&fit=crop&dpr=1 754w, https://images.theconversation.com/files/37048/original/q8pj5gwv-1386271372.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=724&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/37048/original/q8pj5gwv-1386271372.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=724&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Adapted from PLOS Computational Biology</span></span>
</figcaption>
</figure>
<p>These results build on previous work, such as a <a href="http://www.ncbi.nlm.nih.gov/pubmed/16675703">2006 study</a> which assumed people experienced constant amount of dread over time, rather than having dread increase with the size of the delay. There are, however, still some questions that remain unanswered. </p>
<p>First, how does dread scales with time? The researchers looked at events that occur over minutes and weeks, but can the same patterns be found at other timescales?</p>
<p>Second, what causes us to experience dread in the first place? The researchers suggest a couple of potential explanations. It might be that the brain processes designed to prepare us for a painful experience overrule other types of behaviour, even if this other behaviour could be beneficial. Alternatively, dread could be a form of “stimulus substitution”, whereby the anticipation of pain triggers the same responses that we experience during an actual pain event.</p>
<p>Even if the causes of dread remain elusive, understanding how people deal with the anticipation pain could help in a number of fields. In particular, it could be useful when assessing options about a potentially painful future event, whether that event is an electric shock, a medical procedure, or your girlfriend finding out you’ve eaten all the chocolates.</p><img src="https://counter.theconversation.com/content/21037/count.gif" alt="The Conversation" width="1" height="1" />
For most people, a chocolate today is better than one tomorrow. Economists refer to this as “future discounting”, where we prefer to have nice things now rather than wait and unpleasant things later rather…Adam Kucharski, Research Fellow in Mathematical Epidemiology, London School of Hygiene & Tropical MedicineLicensed as Creative Commons – attribution, no derivatives.