https://forecastpod.files.wordpress.com/2018/12/episode_67_michael_greenstone.mp3

World-famous economist Michael Greenstone tells Mike about his main professional mission: to apply the tools of economics to reduce human suffering. But that wasn’t always the case. No indeed. For many years, including all of college, Michael’s main goal in life was to have a career in the NBA. Happily for economics, Division III basketball at Swarthmore didn’t immediately translate to the desired outcome, and Michael found his way to natural resource-energy-climate economics via a short stint in labor economics. Now he and his colleagues are pushing forward on an extremely challenging agenda designed to bring economics into the realm of rigorous nature science. To meet the goal, as Michael puts it, a study should have a global analysis, with plausibly causal mechanisms, and consideration of the true range of adaptations that society would bring to bear in the face of climate change. We’re not there yet, but the pathway is clearer than ever before.

Much as Michael assaulted the hoop back in his Swarthmore days, he now destroys Mike’s ideas about what economics is, and could be. Outside the field, economics has, at least in some quarters, a dodgy reputation: toy models with no practical application, ridiculous assumptions (witness the many ‘assume a can opener’ jokes, inability to predict events like the 2008 economic collapse, untestable hypotheses, to name a few. But the field is changing rapidly, due to, finally, the influx of data, controlled experiments, and computational power. Economics now has the power to identify, investigate, and solve major real-world problems. In one project, Michael co-led a team to identify the systemic conflicts of interest at work in Gujarat’s power plant inspections, and devised a novel system that led to a 30% reduction in the notorious atmospheric pollutant PM 2.5.

Yet Michael is not an environmentalist. Instead, he favors applying agnostic cost-benefit analyses to identify the most efficient ways of reducing suffering and increasing well-being. That might involve climate, but it might not. In fact, Michael favors a focus on what he calls the global energy challenge, rather than the climate problem. The two are linked, but ultimately the grand challenge is to provide inexpensive and reliable energy for everyone while minimizing negative health consequences and avoiding disruptive climate change. It’s a difficult-to-construct three-legged stool … but like all three-legged stools, once built, they don’t wobble.

Music: Balkan Quolou by Watcha Clan and Heiser Zibn by The Underscore Orkestra, both CC BY-NC-SA 3.0 US.