Intertemporal Choice: Climate Change & the COVID-19 Pandemic
The devastating sweep of COVID-19 has shocked the globe into a standstill. The rising death toll and early signs of a global economic depression indicate that the COVID-19 pandemic will shape the future of the globe considerably.
The scale of consequence from the sudden emergence of COVID-19 has placed the pandemic alongside climate change as a defining challenge of our era. Both challenges require individuals to make choices of great consequence in terms of how we respond.
The failure to previously develop infrastructure to deal with a potential pandemic undoubtedly left the globe at a vulnerable starting point when it came to responding to COVID-19. Obvious parallels can be drawn between this lack of foresight and our approach to the potential perils of climate change to date.
This article reflects on the response of the developed world to COVID-19 since the specific nature of the virus has been understood (representing an almost immediate threat). And, contrasts it with our response to climate change, a comparative slow burner.
This reflection will focus specifically on how the decisions we’ve made relate to the time in which their consequences will be realised, and whether this is reflected in some of the core research in this area (intertemporal choice).
Nature of the Challenges
COVID-19: Rapid spread, quick appearance of short-lived symptoms, quick action = quick results
COVID-19 is a highly infectious virus, in part characterised by its speed of transmission and the relatively quick appearance (days/weeks) of potentially deadly complications. The acute phase of symptoms (if experienced) is short-lived and if a person survives, they become immune to re-infection (whether this immunity will be permanent is yet to be entirely proven).
The virus is most dangerous when the proportion of the population that are non-immune (people who don’t have it) is biggest. Only a small percentage of cases develop life-threatening complications, but even developed countries lack sufficient capacity in hospitals to deal with those that would, in the case of an unrestricted spread.
Accordingly, since the nature of the virus has been understood, there has been a clear rationale for countries to implement measures that slow its spread. These measures can have almost immediate impact (shown in reduction of new cases days/weeks after implementation).
The above rationale only applies to economically developed countries that have the resources to withstand a prolonged spread of the virus.
Climate Change: A slow burner (comparatively), quick action needed, but results realised later
Relative to COVID-19, climate change and its impact on humanity occurs over a drawn-out time horizon. The heat-trapping effect of greenhouse gas emissions from our fossil fuel reliant economies has caused a rise in global temperatures of about 0.8 degrees Celsius over the past 100 years, according to the National Oceanic and Atmospheric Administration (NOAA).
The impact of this rise in temperatures does not yet represent an immediate threat to human life (by and large). However, the longer we continue to emit greenhouse gases the worse the ultimate impact on humanity will be.
The majority of the benefits of reducing emissions now will be realised in the future, by preventing the eventual far-reaching, long-lasting and, in many cases, devastating consequences of global warming for life on earth.
Research shows humans are present-biased (overvalue issues with immediate consequences)
Empirical findings from the fields of psychology and neuroscience on intertemporal choice support the theory that humans are present-biased decision makers. ‘Present bias’ refers to the systematic tendency to overvalue immediate rewards, while attaching less worth to long-term consequences.
This causes us to emphasise the present relative to the future and means we are much more likely to act if we believe the cost of inaction will have immediate consequences than if they are to be realised over a long period of time.
There are obvious, potentially dangerous consequences to this trait, such as the potential for people (including policymakers) to overvalue the importance of immediate issues vs challenges that have consequences at a later time. However, this tendency to emphasise the present may also have isolated positive consequences in terms of the efficacy of responses to immediate problems.
The graph below compares hyperbolic discounting (another term for present bias) to exponential time discounting. The exponential function was historically used in economics to describe how humans made intertemporal choices before being proven descriptively inaccurate.
The graph compares the amount to which the valuation is discounted relative to how far into the future it will occur.
The steeper initial drop on the hyperbolic discounting curve shows the valuations falling relatively rapidly during the early stages of distancing from the present moment.
Does present-biased discounting fit with our responses to both crises?
There are multiple differing components to the challenges of COVID-19 and Climate Change. Similarly, there are numerous features of human cognition underlying the choices we make that interlink with the nature of both problems in different ways.
Therefore, it is too simplistic to view the responses to the challenges solely through the prism of research on present bias. However, there are evident similarities between the present-biased curve in the above graph and the responses to both challenges to date.
Response to COVID-19
The speed of transmission of the virus means that in terms of how it is valued, it will have started closer to the y-axis (on the hyperbolic discounting curve in Graph 1) than climate change because there was less time until threat to life. Importantly however, geographical distance meant that at the time the basic nature of the virus was discovered, to every country bar China, COVID-19 did not yet represent an immediate threat to life.
As the virus travelled across the globe there was a global hesitancy to react to the extent that was required, initially, to slow its spread. The fact that the necessary measures to slow the spread of the virus were eventually implemented (showing they were possible) infers that the semi-distant threat of COVID-19 may have been initially undervalued.
However, despite being slow to respond initially, the crisis has since seen the developed world draw on unprecedented levels of its resource reserves to combat the impact of the virus. We have seen many countries implement large-scale, evidence-based measures to combat its spread at speed.
The efficiency with which scientists, public health professionals and policy makers have collaborated to achieve behavioural change has never been seen before.
Suggesting that once the threat of COVID-19 was immediate, our tendency to emphasise the present may have led to a reaction that has ultimately shattered some of the preconceptions of what was possible.
Response to Climate Change
Similarly, our response to climate change replicates our hyperbolic discounting tendencies except it currently stands further from the y-axis on the hyperbolic discounting curve in Graph 1.
Decades of inaction on the advice of experts and evidence-based arguments has recently been replaced with early signs of necessary action (yet still at too slow a pace).
The Paris Agreement saw 196 countries commit to taking steps to limit the increase in global average temperature this century to well below 2 degrees Celsius over pre-industrial levels.
Despite this recognition that future action was needed many countries have yet to prioritise the issue sufficiently to implement actions that would lead to the level of reduction that was agreed. Emission levels continued to grow, and in 2019 global emissions were 4% higher than in 2015, when the Paris agreement was signed.
This trend caused Inger Andersen, executive director of United Nations Environmental Programme (UNEP) in 2019 to claim “Our collective failure to act early and hard on climate change means we must now deliver deep cuts to emissions [of] over 7% each year, if we break it down evenly over the next decade. This shows that countries simply cannot wait.”
COVID-19 related movement restrictions are likely to lower global emissions figures considerably in 2020. However, it is clear this cannot be a long-term strategy, and major transformations of economies and societies will be necessary if the emissions trajectory is to be reversed to the extent that is necessary.
What can be learnt from the initial response to the COVID-19 pandemic?
Acknowledging, that it is difficult to reflect in the midst a crisis and that most of people’s efforts/focus is rightly on the issue at hand; can we take any learnings from the COVID-19 pandemic as an example of human intertemporal decision-making involving matters of great consequence, that can be applied to climate change?
- We are susceptible to delayed reactions (perhaps partly due to our present bias)
The widespread sluggishness of the initial response to COVID-19, inhibited our ability to halt the spread of the virus. The learnings from this might regrettably be reinforced by death tolls acting as a crude signal of the comparative efficacy of responses between countries, with initial trends pointing to proactivity as a core component of effectiveness.
As a result, there is potential for the tragedy of COVID-19 to act as a conscious reminder that we are susceptible to this type of delayed reaction and to be used to motivate early action and forward-looking policy on climate change.
2. It is possible for evidence-based policy to be implemented quickly
Despite being slow to respond initially, the crisis has since seen much of the developed world implement large-scale, evidence-based measures to combat its spread with unprecedented speed and efficiency, once the threat was perceived as immediate. Collaboration between scientists, public health professionals and policy makers has shown that the disconnect between researchers and policymakers can be closed.
The combination of the immediate dangerous threat that is COVID-19 and our tendency to emphasise the present may have led to a reaction that has shattered some of the preconceptions of what was possible. This element of the COVID-19 response is cause for hope.
Conclusion
The nature of climate change means that we will not have an obvious immediate threat to human life to kickstart our brains into action before much of the damage is done.
The challenge will be to maintain some of the same vigour we have seen recently in relation to our response to COVID-19 and apply it early enough to save our planet. Perhaps some of the learnings from our response to COVID-19 may aid us in doing so.
