[QUOTE=Bricker]
Fair enough. Although scientifically, it would seem more exact to simply state that we are 90% confident of this prediction rather than use a word like “proven,” wouldn’t you say?
There’s a reason I insist on the distinction.
One of my jobs is to make bid/no bid decisions on certain contracting opportunities. We may face an opportunity in which we believe we have, say, a 30% chance of winning, and if we win, we would get revenue of $50 million and a profit of $4 million.
How much B&P (bid & proposal) money should I allocate to that effort?
Greatly oversimplifying, certainly no more than $1.2 million, right? I have a 30% chance of getting $4 million; I shouldn’t pay more than $1.2 million for that chance. (In practice then answer is far less for many reasons irrelevant to this discussion).
The same approach, though, must go here.
No, not “whatever we can”. There are some measures that are too expensive to undertake.
If the potential loss is, say, 10$ billion, and there is a 90% likelihood of it happening, then we should not spend more than $9 billion fixing it.
[/QUOTE]
This is a bit (no, very) simplistic - in ways that both support your side and oppose it.
First of all, you are neglecting the discount rate. Money spent today to combat global warming will pay off 10 - 50 years from now. Now, you can compute this simply, but behavioral economics research shows that the discount rate used by people (and thus politicians) in making decisions is far from the current prime rate, and actually varies significantly with both time and the amount at risk. So, you’d actually have to spend a lot less than $9 billion to fix it to make it a sound proposition.
On the other hand, and I see this all the time in work I do, you are treating the benefit of no global warming as a fixed number. The cost of doing something about it is fairly well understood, but depending on your assumptions, the cost of not doing something ranges from trivial (for those people who think Jesus will take them home before anything happens) to civilization ending. This is a mistake I see all the time from those making economic justifications of engineering decisions. So your cost/benefit calculation really doesn’t mean anything - the real issue is the range of benefits, and how much risk we are willing to absorb.
This explains your car example. People overestimate the risk from rare events, and underestimate risk from common events, such as car crashes. Given that, it is hard to get people to pay for safety features which might be justified, which is my the gummint had to force car makers to add seat belts and air bags.
Behavioral economics has shown time and time again that people make stupid economic decisions based on some wiring we seem to all have.
So the real question is, how much risk are you willing to accept in order to save money on mitigation today? How much for your kids?