Focusing on the Extremes

Recently, I listened to a long interview with Richard Thaler, who received a Nobel Prize for his work in behavioral economics. The subdiscipline is — in some ways — a reaction against the classical view of humans as “rational agents,” especially as individuals who consistently and automatically act in their self interest. In practice, most of us have lots of stories of people who do not act in their self interest, consistently or otherwise. (I can proudly state that I am an agent of active irrationality.)

Behavioral economics as a field works to explain these gaps through psychological research and, when possible, to suggest how to make better economic decisions within those constraints. Here in the US — a rich country but one with a relatively limited social safety net — behavioral economics has helped increase the retirement savings rate. One of Thaler’s phrases in the interview I heard was that people aren’t stupid about their self interest. The world is just complex.

His empathy certainly goes some way to explain how new complexities associated with climate change come to limit our actions. Climate impacts often feel distant and uncertain. And some of the scariest projections seem especially hard to motivate action. What could motivate us to prepare for several meters of sea-level rise, for instance, which humans have not experienced for many thousands of years?

A more “behavioral” approach to adaptation and resilience is to normalize an action — make the reflection and preparation automatic. To simplify the process of analysis and require it on the way to other goals.

We may be getting close to some level of risk assessment normalization in many cases, especially with corporate risk disclosure processes and investment processes that require agencies and individuals to show financial viability despite specific climate threats, such as water scarcity or flood impacts measured on a scale of decades. The climate community would refer to these as incremental adaptation interventions. (And a prickly climate specialist might also point out that risk reduction sets a far lower target than enabling full climate resilience.)

How do we incentivize resilience and the preparation for transformational adaptation? How do we get ready for the big things?

We have some examples already, such as in places like Chile and Japan, where earthquake preparation for quite extreme events has become deeply normalized, including 8.0 or higher earthquakes. These cultures and economies are quite different from one another, but they have seen profound changes in their seismic resilience by requiring and mainstreaming that new construction be tested against very severe earthquakes.

Climate change is different than an earthquake, and arguably more complex and diffuse. But the experience of Chile and Japan suggests that we can do much more than we are now, even if we are only focusing on a few low likelihood and high uncertainty events, such as the recent floods in Brazil or the current wave of wildfires in North America.

That would indeed be an investment in a new climate future. One that would also confirm we are resilient in spite of our irrationality.

John Matthews

Corvallis, Oregon, USA