Friday, October 20, 2023

Climate change in the classroom

The Word cloud of CORE students reflects year after year a consistent concern for climate change, probably the biggest problem of our time and the decades to come. CORE’s free e-book The Economy reflects that, starting from Unit 1, and also in the chapter on market failures and a capstone chapter at the end.

In my Introductory Economics class, I asked my students to prepare class presentations with graphs on the correlation between carbon emissions and temperature changes (using data and guidance from the e-book Doing Economics), and to reflect on the policies and institutional players that interevene in trying to address the emergency.

Students immediately realize the interdisciplinary nature of the problem, which combine the knowledge from physics and natural sciences, and the insights from economics, political and behavioral science. They become familiar with the challenge of preventing temperature increases of more than 1.5 or 2 degrees, but they also realize that it is more than a heat problem, with the risk of forced migrations, and natural disasters.

Although the exercise was framed to make students think about the difference between policies (taxes, regulations) and organized institutions (United Nations, national governments), they also see that institutions are not only formal organizations as players, but also the formal and informal rules of the game, for example about the role and voice of future generations, those that will be most affected by the problem. In any case, they see that policy debates are less important than the need to introduce institutional changes, for example in terms of creating global enforcement mechanisms.

The difficulties about reforming institutions and policies come from the uncertainty about the exact profiles of the problem (not about its importance) and the lack of immediate  awareness. Current institutional players find it difficult to cooperate or coordinate in a long run problem. Although the UN has recently been speaking loudly about the emergency, national governments find it easier to cooperate with short run emergencies, such as wars or pandemics.

Three different games in The Economy 2.0’s Unit 4 are meant to model the basic dilemmas of climate change today. In these three games, China and the US have to decide between restricting or playing business as usual (BAU) either in a prisoner's dilema game (where the equilibrium is not the socially optimal outcome), a coordination game (where the socially optimal outcome is an equilibrium but there is also a suboptimal one) and a hawk-dove (or chicken) game, where the distributional problem is more acute but also the socially desirable outcome of both countries restricting is not achieved in equilibrium.

The third version (the chicken game) is very appropriate to see the combination of redistribution and efficiency issues: there is conflict (between countries and income groups/social classes) and common interest. Lobbies (mainly large polluting corporations) are not shown in the simplified games, but they are not missing from the students’ presentations. In these I expected more references to the “de-growth” controversy, but I saw none of it.

Finally, although we used them as a pedagogical tool, I advised the students to be careful with 2x2 games (eg Israel and Palestine in another context) that obscure the complexity at the interior of the institutional players and forget about other relevant stakeholders.

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