The Skeptical Pacificst, The Enthusiastic Environmentalist

I was not aware that one could be awarded the Nobel Peace Prize for environmental advocacy. Outsourced to New Hampshire's own Eagle Times:

There's no shortage of potential Nobel Peace Prize winners who might have more closely reflected Alfred Nobel's intent than Al Gore. What of the student protesters in Iran who dare to challenge the repressive theocracy led by Mahmoud Ahmadinejad? What of the Buddhist monks recently slaughtered by the repressive government of Myanmar? What of the Lebanese political leaders seeking to end Syrian domination of their country? Other nominees this year included a former Finnish president who worked for peace in a region of Indonesia and a Vietnamese monk who leads pro-democracy efforts.

Okay, on to a more constructive note.

I've seen two very interesting things this past week about climate change. The first was Bjorn Lomborg's op-ed in the Washington Post last Sunday. As Lomborg stresses, regardless of your views about each element of the climate change debate, there ought to be some consistency in your proposals about reform. To an economist, the consistency comes from being explicit about the problem to be addressed, the costs and benefits involved for each possible solution to that problem, and committing to the possible solutions that have the highest projected benefits relative to costs. Here's a good example from the op-ed:

The Kyoto Protocol, with its drastic emissions cuts, is not a sensible way to stop people from dying in future heat waves. At a much lower cost, urban designers and politicians could lower temperatures more effectively by planting trees, adding water features and reducing the amount of asphalt in at-risk cities. Estimates show that this could reduce the peak temperatures in cities by more than 20 degrees Fahrenheit.

Global warming will claim lives in another way: by increasing the number of people at risk of catching malaria by about 3 percent over this century. According to scientific models, implementing the Kyoto Protocol for the rest of this century would reduce the malaria risk by just 0.2 percent.

On the other hand, we could spend $3 billion annually -- 2 percent of the protocol's cost -- on mosquito nets and medication and cut malaria incidence almost in half within a decade. Malaria death rates are rising in sub-Saharan Africa, but this has nothing to do with climate change and everything to do with poverty: Poor and corrupt governments find it hard to implement and fund the spraying and the provision of mosquito nets that would help eradicate the disease. Yet for every dollar we spend saving one person through policies like the Kyoto Protocol, we could save 36,000 through direct intervention.

I'm not enough of an expert to know if the magnitudes check out, but this reasoning should be welcome in the debate over reform, as long as there remains a commitment to by all parties to getting the best reforms done. (It echoes other sensible voices here and here, though coming to different conclusions in some cases. I've made analogous points about reforms to Social Security here.)

The second thing was a presentation by Dan Reicher, a member of the Rockefeller Center's Board of Visitors, and now the Director of Climate Change and Energy Initiatives at Google.org. It's "RechargeIt.org" initiative is one of the coolest approaches to reshaping energy use and distribution that I've ever seen. Listen to Dan's podcast here.

Speaking of Google Searches (and Lack of Seriousness)

This post of mine is the first one listed, out of tens of million results, for

show me how to make a baby

Although I do think the VoxSon and VoxDaughter are exemplary, I wasn't aware that this was evident from my blogging. Nor was I previously aware of such a link between income inequality and fertility.

Teachers and Technology in the Classroom

Catching up on my blog reading, via Joe Malchow, I find Steve Jobs taking issue with teacher unions in K-12 education:

CEO Steve Jobs lambasted teacher unions today, claiming no amount of technology in the classroom would improve public schools until principals could fire bad teachers.

Jobs compared schools to businesses with principals serving as CEOs.

"What kind of person could you get to run a small business if you told them that when they came in they couldn't get rid of people that they thought weren't any good?" he asked to loud applause during an education reform conference.

"Not really great ones because if you're really smart you go, 'I can't win.'"

In a rare joint appearance, Jobs shared the stage with competitor Michael Dell, founder and CEO of Dell Inc. Both spoke to the gathering about the potential for bringing technological advances to classrooms.

"I believe that what is wrong with our schools in this nation is that they have become unionized in the worst possible way," Jobs said.

"This unionization and lifetime employment of K-12 teachers is off-the-charts crazy."

I think Jobs has missed the mark here, in two ways.

First, the part of K-12 education that is off-the-charts crazy is how little choice there is for consumers. When did we decide that sending our children to education factories with hundreds or thousands of students was a good idea? With more choice and thus more competition, parents and students could better hold K-12 educators accountable for the quality of the services they provide. Bad practices--if unions and lifetime employment contracts are bad practices--wouldn't survive vigorous competition in the product market. Education reformers should be focused on expanding the choice of provider in education. Almost everything else would fall into place. The prospect of losing "economies of scale" in education doesn't scare me a bit. It shouldn't just be the rich and the religious who have choice, and we shouldn't be using our political system to actively undermine and restrict choice.

Second, as a wise man once said, "there is more to life than increasing its speed." I think the benefits of technology in the classroom are overstated. The best things to put in a classroom to promote a student's education are good instructors and good peers. The props are very much secondary. The best lecture is a conversation, not a slideshow or a video.

Yet Another Reason Why I Don't Run NIH

My old friend (and former mentor) Geoff Davis runs the website phds.org, where he blogs on matters related to engineering and science, particularly the education and professional development of young scientists. Prompted by the concluding paragraph of my post on opportunity cost as it pertains to stem cell research, Geoff writes:

I suspect that Andrew is more reacting crankily to a boilerplate plea for money rather than being completely serious. After all, this same argument could be made about any contender for federal investment, and I haven't ever heard of anyone else making a serious effort to estimate returns of alternative federal investments in the course of asking for more money.

As if we were still sitting at Murphy's, I will rewrite this paragraph as follows:

I am sure that Andrew is not only reacting crankily to yet another boilerplate plea for money but is completely serious. After all, this same argument should be made about every contender for federal investment, and it should be a part of every stage of the federal budgeting process to make a serious effort to estimate the returns of alternative federal investments in the course of asking for more money.

From the few grant panels on which I've served, I don't think my description is so wide of the mark. The panels rank the grant applications in order of their scholarly promise, and the budget that has been previously allocated determines how high in the ranking an application has to be in order to get funded. In that stage of the process, the ranking is the consideration of opportunity cost. I've even been on some panels in which there was discussion of not using the whole budget allocation if the set of applications was unusually weak.

I have less understanding of how the budget allocations for the grant panels are set, but I presume that policy makers, in consultation with the bureaucrats, assess the returns from past allocations to scientific research and decide on how much they want to budget going forward. Setting that budget is, in some form, the consideration of opportunity cost. As Geoff goes on to say:

His point about opportunity costs is a good one to remember, though. Imagine instead that Fuller and Reeve were demanding a bigger slice of the NIH pie for stem cell research. Something else would have to be cut. How would one make the case for stem cells as opposed to, say, more research on cancer or heart disease?

One would have to get inside the mind of the program officers at the NIH to know this for sure, but at some level, it's already being done. It just wasn't being done--or even acknowledged--in the WaPo op-ed that prompted my original post.

Economics Missing in Action: Opportunity Cost

In today's Washington Post, Joseph Fuller (founder of the Monitor Group) and Brock Reeve (executive director of the Harvard Stem Cell Institute) argue that the United States may soon lose its leadership position in stem cell research. Their concluding paragraph:

In short, the stem cell sector is at risk of experiencing a failure to launch at the national level. Yes, some progress is being made: WARF has just revised some of its licensing policies; venture capital activity has picked up recently; and academic research and clinical centers, disease foundations and patient-advocacy groups are adopting a more aggressive stance in breaking down existing barriers. But will this be enough? Or will foreign governments, using America's biotech success as a model, systematically encourage the development of stem cell research and, not satisfied with emulating our competitive performance, succeed in outstripping us?

This experience is contrasted in the body of the op-ed with past successes in biotech, and the consumer electronics and automotive sectors are held out as examples where the United States "fumbled" its global leadership position.

It is quite possible that everything the authors argue is true, but even in that case, their argument is incomplete. Consider the last question they pose in their concluding paragraph. So what if foreign governments tax their citizens to support stem cell research? What have we lost?

We will not have lost the opportunity to benefit from that research. Some part of the research will find its way into products--those products will be available here at prices similar to what they would be if the products were developed domestically. No loss to the consumers.

We will not necessarily have lost the opportunity to invest in these technologies as private entities--the capital markets in Europe and Asia are generally open to U.S. investments. The governments on these continents would have to specifically block or discourage that investment.

We will not have taxed our citizens to support production of these goods. So we will have that money, whether in the government or the private sector. How do we know whether that money is better spent on stem cell research than keeping it in the private sector or with the government?

That's the key element that is missing from the op-ed: what is the opportunity cost of committing the money to stem cell research relative to its best (or most likely alternative use)? Ultimately, the authors cannot be persuasive just by claiming that the gross returns to stem cell research conducted domestically are positive or high. The returns to the activity--net of the opportunity cost of the investment--must be positive or high.

Sir Tim Berners-Lee on the Read/Write Web

Via Maryam Webster, guest blogging at Easy Bake Weblogs, here is Mark Lawson's interview with Tim Berners-Lee, cited as the creator of the first website. I commend the whole thing, particularly for Berners-Lee's accurate perception that while offering a new medium to an imperfect humanity will lead to new opportunities for its imperfections to spread, it will also allow for new opportunities for excellence, and that we should focus on the latter.

Here's my favorite excerpt:

Mark Lawson, BBC: Moving on to the consequences and the uses of the internet, the first question that arises a lot is the quality, the reliability of the information that is there. Now some people think that the internet has led to this great empire of lies, of unreliability. You simply don't know what the state of any of this information is.

Tim Berners-Lee: When you say there are a lot of lies out there, if you go randomly picking up pieces of paper in the street or leafing through garbage at the garbage dump what are the chances you'll find something reliable written on the paper that you find there? Very small. When you go onto the internet, if you really rummage around randomly then how do you hope to find something of any of value?

But when you use the web, you follow links and you should keep bookmarks of the places where following links turns out to be a good idea. When you go to a site and it gives you pointers to places that you find are horrible or unreliable, then don't go there again.

You see out there right now, for example, when you look at bloggers some of them are very careful. A good blogger when he says that something's happened will have a point to back, and there's a certain ethos within the blogging community, you always point to your source, you point all the way back to the original article. If you're looking at something and you don't know where it comes from, if there's no pointer to the source, you can ignore it.

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E-Commerce

The Census Bureau has been tracking retail E-Commerce on a quarterly basis for about five years. The information is released about halfway through the following quarter, and so the report for the 3rd quarter of 2004 was made available on Friday.

If you have never seen this report, take a guess at the fraction of all retail sales that are conducted via E-Commerce. Since you are reading a blog (and a rather obscure one at that), I'll bet that you guessed too high. It's still only 2 percent, at about $17.6 billion out of $916.5 billion last quarter. The growth rate for E-Commerce is about 2-3 times the pace for total retail sales, but even though that sounds like a lot, it will take a while for the E-Commerce share to become very important in the aggregate. (Simple extrapolation of the last five quarters of growth in each series would get to an 8 percent share in another 10 years.)

Let me give the process a boost. My favorite on-line merchant, at least in the area of food, is Jacques Torres Chocolates. Located in the area of Brooklyn known as DUMBO (Down Under the Manhattan Bridge Overpass), this guy makes the best chocolates I have ever tasted. If you cannot make it there in person, hit the link on the sidebar and treat yourself right this holiday season.