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 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.