Assignment on Systemization
EnvironMEntalist? Introduction
A couple years ago I saw a Facebook ad saying I could “rent my roof” for solar panels. I had always considered solar power pretty neat but not for my budget. I clicked on the ad because it sounded like a solar power that I could afford. A couple months later I saw my leased solar panels being installed. 1a. Platonic Rationalist Classical economics using expected utility theory (Kahneman, 2011) would look at the cost of the panels and look at the money that I would have paid for the power to compare them. If the money spent on the panels was more then that would be a bad decision and if it was less it would be a good decision.
Being a behavioral economist I was very interested in determining if solar power was saving vs. costing me money. It turns out that it’s difficult to know for sure if I’m saving money or not saving at all or even loosing me money. This calculation might have been easier if we didn’t replace an HVAC system at the same time with a completely new system. After a couple years and some quick and dirty calculations I estimate that our solar system costs a little more than it would have cost if we had just used the power from the grid. This deficit is mostly because we use more power than we use and the money we get back for the extra power is much less than what the power company sells it for. So Classical economic theory would say this was a bad decision but probably not a horrible one.
1b. Utility theory would make a similar assessment but if we take into account the fact that I got a psychological boost from leasing solar panels. I think this boost actually gave me more psychological utility than I would have had with out panels. So according to utility theory this was a good decision.
The St. Petersburg paradox suggests that people should only look at expected value of the possible outcomes but Bernoulli et al. talk about how the value changes over the different amounts because we don’t put a lot of psychological value on very low likelihood outcomes or very large payouts because the money doesn’t equal utility aka psychological value (Kahneman, 2011). Happiness research on how the value of money decreases as the amount of money increases. I like the psychological explanation for this effect that was laid out by Kahneman (2011). Just like we have trouble detecting the linear increase in the luminosity of a light bulb we have trouble equating the exact value of money to it’s psychological utility. Our ability to detect differences in sensations and monetary value seems to follow a logarithmic function rather than a linear one.
I pay the same amount of money for power each month and at the end of the year I get a small credit on our bill that lasts a couple months where I owe the power company nothing. This is a psychological benefit because not worrying about the power has allowed me not to worry about every little power use and I don’t worry about our relatively chilly summer household. I can compare this to the worry I have with our water bill, which is not constant, and since it has been left on a couple times in the past I’ve become quite paranoid about shutting off water usage. This paranoia can sometimes cause psychological disruption in our family and I’m glad that we no longer have they same dynamic when it comes to power use.
I’ve also noticed when I visit friends an family without A/C I’m immediately more hostile and think that there might be something to the emotional priming research that says that being hot could make people angrier etc. (Kahneman, 2011). Who knows how much we are gaining in less emotional draining of a hot house. In fact this is related to my favorite example of correlations not demonstrating cause. It’s a consistent finding that ice cream sales and crime are correlated. Does this prove that ice cream causes crime? Heck no! It does suggest a causal relationship between heat and crime but because this is a correlation a plausible explanation is not enough to prove causality. Again it’s hard to calculate but if we measure psychological utility I would estimate that the likely increase in overall monetary expenses would be more than offset by the less worry, lack of emotional priming and quality of life gained by using solar panels.
1c. Prospect theory might be an explanation for why people don’t take the plunge and get solar panels. When making this decision I found myself consulting relators and they were skeptical that a hypothetical house buyer who couldn’t afford the panel lease. I acknowledge that this is a small possibility but I am convinced (self-diluted?) that the appeal of a solar powered house will outweigh this potential loss. However, the risk of loss as opposed to the potential gain makes this decision relatively rare. I think this rarity is in part because the loss aversion as predicted by prospect theory (Kahneman, 2011).
2a. Plato would have looked at this decision with a shake of the head and pointed out that my emotions corrupted the pure rationality that a philosopher king would have used to maximize my wealth (Haidt, 2012). This reminds me of the benefits and problems associated with authoritarian governments. China currently produces more carbon dioxide than any other nation but recently has made fast improvements in the direction of this trend by also building more CO2 neutral power sources like solar panels (I’m pretty sure my panels were made in china) and going on a nuclear power building spree (NEAA, 2015; IAEA, 2018).
2b. Since I am A WEIRD Psychologist this should be easy for me! A psychologist from the Kohlberg school of thought as described by Haidt (2011) would say that I have moved on from the moral development stage where I am only concerned about myself and about being punished (Pre-conventional). Part of my motivation is most certainty to be seen as a good citizen (Conventional). This is demonstrated because I considered other topics for this paper that put me in a worse light in conventional moral thinking i.e. my views on nuclear power, oil pipelines etc. anger/disappoint just about everybody I know. However, my concern about the global environment and not just my personal pain/pleasure is post-conventional reasoning. I am always trying to rationally calculate the Utility of my actions including this one which fits the WEIRD moral framework very well.
2c. The poor Brazilians as described by Haidt (2011) might understand my desired for a sacred and pure earth but would most likely recoil at my Rich American choice that I made to value the earth as a whole without first considering my community (nation), family and friends. On a related note Glaucon would point to my actions and say the appearance of moral decisions was more important than the actual effects. It should also be pointed out that as described in the next section the extra money that I spent giving me a do gooder reputation (the solar panels are up for everyone to see and I’m kind of humble bragging about them right now) could also have been spent buying vaccines, bed nets, etc. that would have helped many more people than my minor contribution to a less steep curve in Carbon emissions.
2d. Liberals would probably applaud my attention the care and harm of the environment and people affected by pollution. However, as a utilitarian I also have to consider the potential harms that my solar panels caused in their production and in their installation. One of my favorite things about my solar panels is that that it’s encouraged me to find ways of using the now wasted energy that I’m selling back to Tucson Electric Power for pennies. I.e. I’m considering buying a fully electric car however, the harm that decision would cause in the form of cobalt minders (needed for batteries) in the Congo etc. I’m not being entirely fair to those miners or the people who made these panels.
Glaucon was not entirely correct in his belief that all morality is for show because if I can find the best way to frame this decision then I will promote the better way… Although he could point out that my moral reputation is dependent on my ability to look good in front of my students. So Glauconian thinking is not killed here. 2e. Conservative’s have a lot of options when considering my decision. Purity/Sanity based arguments may be influential as there is a movement in some religious conservatives to take care of God’s creation (Rust, 2017). Authority based decisions may be justified by pointing out less dependence on oil could help US foreign policy and our dominance of the world economy. This frame of reference might also be a valid way to simulate the In-group moral taste bud. Libertarianism conservatives might appreciate my greater independence from a monopolistic power company.
References
Haidt, J. (2012). The righteous mind. Why Good People are Divided by Politics and Religion …. https://doi.org/10.1017/CBO9781107415324.004
Rust, Niki (2017). CNN Retrieved 2018-06-01 http://www.bbc.com/earth/story/20170206-religion-can-make-us-more-environmentally-friendly-or-not
Kahneman, D. (2011). Thinking, fast and slow. Macmillan.
Netherlands Environmental Assessment Agency . "CO2 time series 1990-2015 per region/country" . Retrieved 2017-03-07.