Steve Levitt and Steve Dubner, the SuperFreakonomics guys (formerly the Freakonomics guys) have raised a lot of temperatures with their chapter on global warming. The backlash began with Paul Krugman, who in turn was neatly skewered by several authors, but most effectively by the journalist Ari Armstrong.

The critics have raised two objections that come perilously close to contradicting each other: First, Levitt and Dubner are accused of minimizing the problem. Second, they are accused of overeagerness to solve the problem, as opposed to, say, demonizing the responsible parties. Of these, only the first deserves to be taken seriously.

Among the more serious critics is the world’s funniest economist, Yoram Bauman. In an email exchange with Levitt, Bauman scores the first point. Levitt has left himself wide open with the Superfreaky observation that carbon dioxide generated by human activity is only a small percentage of what’s already circulating through the atmosphere. As Bauman rightly observes, this is a bogus comparison, because unlike human-generated emissions, circulating CO₂ adds nothing to the total accumulation. It’s a little like observing that the water flowing into my bathtub each minute is only a small percentage of what’s already sloshing around in there. That observation has no bearing on whether I’m headed for a flood.

But this criticism applies to four ill-chosen lines in a 45 page chapter. I find most of Bauman’s other criticisms less compelling. Yes, the chapter opens by recalling the media-driven global cooling scare of the 1970s. Yes, a careless reader might conclude that Levitt and Dubner equate today’s legitimate concern about global warming with that brief episode of media hype. But such a reader would have to gloss over passages such as this one: “There is essentially a consensus among climate scientists that the earth’s temperature has been rising and, increasingly, agreement that human activity has played an important role.” The same reader would have to miss the citation to Marty Weitzman’s estimate that we face a (rather staggering) 5% chance of global catastrophe. And most of all, that reader would have to somehow not notice that the bulk of the chapter is a paean to people who are trying to solve this problem.

So despite Bauman’s undeniable zinger, I am inclined to (largely) absolve Levitt and Dubner of excessive skepticism or of understating the potential problem. Instead, I object to the economic errors that nobody else seems to have mentioned. Starting here:

In principle, this shouldn’t be such a hard problem. If we knew how much it cost humankind every time someone used a tank of gas, we could simply levy a tax of that magnitude on the driver. The tax wouldn’t necessarily convince him to cancel his trip, nor should it. The point of the tax is to make sure the driver faces the full cost of his actions (or, in economist-speak, to internalize the externality.)

This would be correct if all the costs were felt immediately. But as it is, calculating the right tax requires a judgment call about how heavily to weight the interests of future generations. That’s fundamentally a philosophical issue, not an economic one—but it can’t be ignored. And it is a hard problem.

The great philospher/economist/mathematician Frank Ramsey, who plays a large role in The Big Questions, believed it was an ethical imperative to treat future generations’ interests as equivalent to our own. It was this position that led the authors of the Stern report to approve the prospect of massive anti-warming expenditures. But the same position dictates a massive increase in saving and a drastic reform of the tax system to incentivize that massive increase. In other words, we’ve never adopted the Ramsey position to guide any other policy; why, then, should we suddenly adopt it now?

Indeed, in The Big Questions (pages 186-189) I’ve argued for the exact opposite of Ramsey’s position—putting zero weight on the interests of future generations. I’m not sure this argument is right, but I’m not sure it’s wrong either.

I can’t criticize Levitt and Dubner’s stand on this issue, because they take no stand—which is fine; for what they’re doing, they don’t need to. But without taking a stand they can’t correctly claim that it’s in principle an easy matter to calculate the right gas tax.

That’s not, however, the biggest economic error in this chapter. That occurs in an absolutely bizarre (but fortunately tangential) paragraph where black lung disease is offered as an example of an environmental externality. In italics even:

In the United States alone, more than 100,000 coal miners died on the job over the past century, with another estimated 200,000 dying later from black lung disease. Now those are externalities.

Umm. No, they’re not, actually, as I hope anyone who’s passed my freshman economics course could tell you. Black lung disease is a huge and horrible cost of coal mining but it’s not an external cost for the simple reason that it falls on coal miners. The one and only defining characteristic of an externality is that it falls on someone who was never a party to the transaction that created it.

Well, never mind, that paragraph has no bearing on the thrust of the chapter. But I have to wonder how it could have survived the editing process.

The final two thirds or so of the chapter is devoted to a lively and engaging survey of some extremely inventive and potentially cheap solutions, some of which involve helium filled balloons, which makes me happy. Levitt and Dubner don’t claim to know what will work and what won’t (if they did, they’d deserve a lot more ridicule than they’re getting), but they do claim this stuff is worth thinking about, which seems to be obviously true. I’m sure that some of the negative response comes from knowledgeable skeptics, but I suspect that more of it comes from people who don’t want there to be cheap solutions.

There’s one cheap solution, though, that gets too little play here: Let the earth warm up and live with the consequences, which seems likely to be cheaper than a Stern-sized prevention plan. Suppose, for example, that we had to move New York City inland within a century. That’s an expensive prospect, but less so than you might think. Over the next century we’re going to be rebuilding most of New York City anyway, since few buildings last 100 years. The cost of global warming is not the cost of rebuilding the entire city; it’s the additional cost of building it in one place rather than another. (I am grateful to David Friedman for inspiring this observation. And yes, I realize that there are serious coordination problems that I’ve left unmentioned, but the point remains. I also realize that in a worst-case scenario we might regret this plan.)

Is that the right way to go? I have no idea. I also have no idea whether any of Levitt and Dubner’s solutions will work. I do think everything should be on the table.

To avoid leaving a false impression: Despite all the criticism, some of it justified and some of it mine, the bulk of this chapter is not just unobjectionable; it’s enlightening, it’s fun to read, and it lays appropriate stress on the key point that pollution is a cost, not a sin—a problem to tackled, not an occasion to excoriate people with different priorities. I haven’t yet read the other chapters, but I suspect they’re real good too.