Sunday, May 18, 2008

Pragmatic or Idealistic?

Here we are again another round of debates on whether to drop or mend Cost-Benefit-Analysis (CBA) by Richard L. Revesz, Lisa Heinzerling, and Ryan Avent at Grist. It seems to me the two sides have more in common than they thought and all the arguments boil down to a philosophical difference: are you pragmatic or idealistic?

Things in common:

1. CBA has many problems and requires mending if not trashing;
2. In spite of all these problems CBA remains a very powerful tool in environmental decision-making.
3. We need to either mend CBA or come up with something better.

Things pro-CBA group often ignores:

1. Multi-criteria Decision Making (MCDA) is an alternative, and that is how individual and collective decisions are often made after all;
2. The economic foundation which CBA is based on is shaking.

Things pro-trashing-CBA group often ignores:

1. The CBA problems are deeply rooted in the assumptions of neo-classical economics, e.g. preferences are fixed and everything is substitutable. The evil is the system, not the CBA itself.
2. System error doesn't happen overnight and will not leave overnight. So the question is, how to make a difference?

Two strategies:

Pragmatic people attempt to show pro-environment decisions are justified on economic ground by factoring in environmental benefits in a CBA. We call this strategy "Use their spear to attack them (Yi Zi Zhi Mao, Gong Zi Zhi Dun)" in China. By speaking the same language (aka, $) we are more effective in stopping people from degrading our environment, at least in a short term.

Idealist people try their very best to kill CBA and to promote a new system. This may take a while considering the dormancy of the current economic system but at least we are on the right path.

Surely society needs both groups. Which group we each choose to be is a matter of personal choice. But please, please save some energy in attacking each other--we have a common dream; only the path is different.

Update: Revesz's new post.

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