Friday, February 3, 2012

Tim O Reilly on Pascal's Wager

Tim O Reilly, founder and CEO of O Reilly Media, writing on The Edge says:

In 1661 or 1162, in his Pensees, philosopher and mathematician Blaise Pascal articulated what would come to be known as Pascal's Wager, the question of whether or not to believe in God, in the face of the failure of reason and science to provide a definitive answer.

"You must wager. It is not optional. You are embarked. Which will you choose then?...You have two things to lose, the true and the good; and two things to stake, your reason and your will, your knowledge and your happiness; and your nature has two things to shun, error and misery. Your reason is no more shocked in choosing one rather than the other, since you must of necessity choose. This is one point settled. But your happiness? Let us weigh the gain and the loss in wagering that God is. Let us estimate these two chances. If you gain, you gain all; if you lose, you lose nothing. Wager, then, without hesitation that He is."
While this proposition of Pascal's is clothed in obscure religious language and on a religious topic, it is a significant and early expression of decision theory. And, stripped of its particulars, it provides a simple and effective way to reason about contemporary problems like climate change.

We don't need to be 100% sure that the worst fears of climate scientists are correct in order to act. All we need to think about are the consequences of being wrong.

Let's assume for a moment that there is no human-caused climate change, or that the consequences are not dire, and we've made big investments to avert it. What's the worst that happens? In order to deal with climate change:

1. We've made major investments in renewable energy. This is an urgent issue even in the absence of global warming, as the IEA has now revised the date of "peak oil" to 2020, only 11 years from now.

2. We've invested in a potent new source of jobs.

3. We've improved our national security by reducing our dependence on oil from hostile or unstable regions.

4. We've mitigated the enormous "off the books" economic losses from pollution. (China recently estimated these losses as 10% of GDP.) We currently subsidize fossil fuels in dozens of ways, by allowing power companies, auto companies, and others to keep environmental costs "off the books," by funding the infrastructure for autos at public expense while demanding that railroads build their own infrastructure, and so on.

5. We've renewed our industrial base, investing in new industries rather than propping up old ones. Climate critics like Bjorn Lomborg like to cite the cost of dealing with global warming. But the costs are similar to the "costs" incurred by record companies in the switch to digital music distribution, or the costs to newspapers implicit in the rise of the web. That is, they are costs to existing industries, but ignore the opportunities for new industries that exploit the new technology. I have yet to see a convincing case made that the costs of dealing with climate change aren't principally the costs of protecting old industries.

By contrast, let's assume that the climate skeptics are wrong. We face the displacement of millions of people, droughts, floods and other extreme weather, species loss, and economic harm that will make us long for the good old days of the current financial industry meltdown.

Climate change really is a modern version of Pascal's wager. On one side, the worst outcome is that we've built a more robust economy. On the other side, the worst outcome really is hell. In short, we do better if we believe in climate change and act on that belief, even if we turned out to be wrong.
But I digress. The illustration has become the entire argument. Pascal's wager is not just for mathematicians, nor for the religiously inclined. It is a useful tool for any thinking person.

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