Ethics, Equity & Models

I’m at the 2008 Balaton Group meeting, where a unique confluence of modeling talent, philosophy, history, activist know-how, compassion and thirst for sustainability makes it hard to go 5 minutes without having a Big Idea.

Our premeeting tackled Ethics, Values, and the Next Generation of Energy and Climate Modeling. I presented a primer on discounting and welfare in integrated assessment modeling, based on a document I wrote for last year’s meeting, translating some of the issues raised by the Stern Review and critiques into plainer language. Along the way, I kept a running list of assumptions in models and modeling processes that have ethical/equity implications.

There are three broad insights:

  1. Technical choices in models have ethical implications. For example, choices about the representation of technology and resource constraints determine whether a model explores a parameter space where “growing to help the poor” is a good idea or not.
  2. Modelers’ prescriptive and descriptive uses of discounting and other explicit choices with ethical implications are often not clearly distinguished.
  3. Decision makers have no clue how the items above influence model outcomes, and do not in any case operate at that level of description.

My list of ethical issues is long and somewhat overlapping. Perhaps in part that is due to the fact that I compiled it with no clear definition of ‘ethics’ in mind. However, I think it’s also due to the fact that there are inevitably large gray areas in practice, accentuated by the fact that the issue doesn’t receive much formal attention. Here goes:

  • What do you recognize in the system boundary?
    • … in the model boundary?
  • What constitutes welfare?
    • Do you value non-market services? Health, environment, …
    • Do you monetize the value? (A price implies possibility of substitution)
    • By what method – willingness to pay, willingness to accept, replacement cost? (Results may be skewed by endowment effects or implicit allocation of property rights)
    • Does happiness = consumption?
    • Consumption flows vs. stocks (long-lived durables)?
    • Does temporal distribution matter?
    • Do interpersonal comparisons matter?
    • Leisure time?
    • Does stability or gradual/orderly change have intrinsic value (e.g., because of mortgages)?
    • Does freedom count?
    • Does planning have a cost or benefit? (Or, is it valuable to be able to be impulsive?)
    • Is it intrinsically valuable to be part of the solution vs. part of the problem, help the poor, etc.?
  • Are preferences stable?
    • Do they evolve socially, e.g. within networks?
    • Do they interact (vehicle size, phone networks, work time)?
    • Is some consumption an arms race?
  • What attitude is taken toward risk?
    • Neutrality, aversion, …?
    • Are risks on earth diversified by risks on other planets?
  • Are diverse stakeholders represented?
    • Do winning stakeholders compensate losers?
    • Is inequality within regions/groups considered?
  • (How) do you discount? (A discount rate is a price, and implies substitutability)
    • Does discount vary with time, space, or income?
    • Is there heterogeneity in agent discount rates?
    • Do rates evolve socially?
    • Is there pure time preference > 0?
    • How much inequality aversion?
    • Regional/income adjustments (Negishi weights)?
  • What is the model horizon?
    • What value is placed on results beyond the horizon?
      • Are there transversality conditions?
    • Is anything meaningful known about deep time?
    • Is there extinction risk?
  • What is the basis for the discount rate?
    • Ethical?
      • Principle?
    • Empirical?
      • Market interest rates (revealed preference)?
        • Are rates adjusted for negative social externalities that make social returns < market returns, and possibly negative?
        • Do markets correctly transmit preferences?
      • Future potential for technology/productivity growth?
      • Experiment?
  • Are there limits to growth?
    • Infinite technology?
    • Thermodynamic limits?
    • Material resource limits?
    • Environmental degradation?
    • Do they cause overshoot?
    • How will people respond?
  • What is substitutable?
    • Can technology bring back extinct species, if we want them?
    • Material consumption replaces environmental services?
  • Is the model anthropocentric?
    • Do nonhuman species have intrinsic value or rights?
  • Is there rule of law?
  • Who is responsible for action? Government? Firms? Individuals?
    • Who is sovereign?
  • How do policy levers work?
    • Are they efficient?
    • Are they coercive?
    • Are transfers a ‘leaky bucket’?
    • Will intercountry transfers be defeated, squandered, captured by elites?
  • How do you represent behavior?
    • What is the adaptive capacity of society?
    • How rational are agents?
      • What are the implications of agents’ misperceptions of feedback, information limitations, etc. for their fate?
  • Are market failures, institutional barriers, agency problems, etc. represented?
    • Are there tradeoffs between local and global issues?
  • What do you recognize and analyze as uncertain?
    • Have extremes been explored? (Reality isn’t plausible, but accepted models have to be plausible).
  • Are demographic distinctions made (age, gender, …)?
    • Are children intrinsically valued?
    • Are family size decisions endogenous?
    • Does population enter into the calculation of welfare?
      • Is it better to have lots of poor people or a few rich ones?
  • Does trade involve asymmetric power relationships?
  • Are distinct successive generations recognized?
    • Can the current generation enforce investment plans on the future?
    • Will the actions of the current generation influence future generations by example?
    • Do generations value bequests to the future?
      • To succeeding generation as a whole, or only to individuals’ direct descendants?
  • Are outcomes reduced to a single metric?
    • … or are policy makers (model users) presented with multidimensional output and allowed to construct their preferences for outcomes?
  • Are equity and efficiency treated as separable?
  • Is equity treatment motivated by principle, or a search for negotiation leverage?
  • Do decision makers understand the implications of ethical assumptions in the model?
  • Is it possible to identify the ethical implications of policy instruments that have not been explicitly modeled?
  • Is there debt or responsibility for past actions (e.g., carbon debt)?
    • Does some time constant apply (do you retire debt as generations die, or natural processes offset damages)?

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