Why don’t we listen to the markets on global warming?

Responding to recent media coverage noting that the insurance industry is basically taking future disasters caused by global warming as a given and that hedge fund investors are looking for ways to capitalize on the effects of climate change, Yale Law School’s Dan Kahan — who has in the past suggested the creation of a ...

By , a former associate editor at Foreign Policy.
Stuart Franklin/Getty Images)
Stuart Franklin/Getty Images)
Stuart Franklin/Getty Images)

Responding to recent media coverage noting that the insurance industry is basically taking future disasters caused by global warming as a given and that hedge fund investors are looking for ways to capitalize on the effects of climate change, Yale Law School's Dan Kahan -- who has in the past suggested the creation of a specialized index to track market concensus on climate change -- wonders why none of this is having much of an effect on the debate. He suggests unconcious cognitive factors are to blame:

Too many climate-change advocates have a hard time seeing/using evidence of this sort because it involves mining insight (as it were; new mining opportunities are also being created by metling permafrost) from the rationality of market behavior, not to mention recognizing that climate change does in fact involve a balance of positive and negative effects, even if on balance it is negative. 

At the same time, too many climate skeptics are unwilling to acknowledge evidence of any sort--even the truth-corroborating price signal of self-interested market behavior!--that lends credence to the scientific underpinnings of those who are making the case for effective collective action to avoid the myriad welfare-threatening upshots of a warming earth. So this evidence doesn't register on them either.

Responding to recent media coverage noting that the insurance industry is basically taking future disasters caused by global warming as a given and that hedge fund investors are looking for ways to capitalize on the effects of climate change, Yale Law School’s Dan Kahan — who has in the past suggested the creation of a specialized index to track market concensus on climate change — wonders why none of this is having much of an effect on the debate. He suggests unconcious cognitive factors are to blame:

Too many climate-change advocates have a hard time seeing/using evidence of this sort because it involves mining insight (as it were; new mining opportunities are also being created by metling permafrost) from the rationality of market behavior, not to mention recognizing that climate change does in fact involve a balance of positive and negative effects, even if on balance it is negative. 

At the same time, too many climate skeptics are unwilling to acknowledge evidence of any sort–even the truth-corroborating price signal of self-interested market behavior!–that lends credence to the scientific underpinnings of those who are making the case for effective collective action to avoid the myriad welfare-threatening upshots of a warming earth. So this evidence doesn’t register on them either.

Climate skeptics aside, the fact that there’s a widespread consensus in the business community that climate change is happening, it doesn’t necessarily mean there’s a consensus that it’s a bad thing. The melting of Arctic ice might be bad for the planet as a whole, but for energy companies it means new shipping lanes and areas for exploration. 

 

Joshua Keating was an associate editor at Foreign Policy. Twitter: @joshuakeating

Tag: War

More from Foreign Policy

An illustration shows George Kennan, the father of Cold War containment strategy.
An illustration shows George Kennan, the father of Cold War containment strategy.

Is Cold War Inevitable?

A new biography of George Kennan, the father of containment, raises questions about whether the old Cold War—and the emerging one with China—could have been avoided.

U.S. President Joe Biden speaks on the DISCLOSE Act.
U.S. President Joe Biden speaks on the DISCLOSE Act.

So You Want to Buy an Ambassadorship

The United States is the only Western government that routinely rewards mega-donors with top diplomatic posts.

Chinese President Xi jinping  toasts the guests during a banquet marking the 70th anniversary of the founding of the People's Republic of China on September 30, 2019 in Beijing, China.
Chinese President Xi jinping toasts the guests during a banquet marking the 70th anniversary of the founding of the People's Republic of China on September 30, 2019 in Beijing, China.

Can China Pull Off Its Charm Offensive?

Why Beijing’s foreign-policy reset will—or won’t—work out.

Turkish Defense Minister Hulusi Akar chairs a meeting in Ankara, Turkey on Nov. 21, 2022.
Turkish Defense Minister Hulusi Akar chairs a meeting in Ankara, Turkey on Nov. 21, 2022.

Turkey’s Problem Isn’t Sweden. It’s the United States.

Erdogan has focused on Stockholm’s stance toward Kurdish exile groups, but Ankara’s real demand is the end of U.S. support for Kurds in Syria.