The heat of the season is beginning to arrive earlier in the morning. And on this particular day it seemed especially sensible to get out ahead of the sun – well before it began to beat down with any real strength.  So I headed out early for a leisurely morning amble.  The route took me up a road that has very high curbs to channel the water from the fall monsoons. On this specific stretch of curb there was a single lizard, hugging the side of the concrete wall.  It scurried maybe 10 feet ahead of me as I approached, and then it stopped.  As I again advanced within three feet, it jumped ahead maybe another 8-10 feet, still hugging the curbside. And then again. . . .

I don’t have a clue why the lizard insisted on moving forward with me, hugging tightly to the pavement sidewall. The smarter thing, it seemed to me, would have been to scurry at a very quick right angle away from me to safety.  Yet, as I again approached it for perhaps the fifth time, it suddenly turned 180 degrees and bolted past me in the opposite direction – leaving me alone with my thoughts.  Although the suddenness of its movement startled me, I reflected a little and thought . . . that was very cool. And I immediately wondered why it is that we are so often dogged in maintaining our existing course of action?

A Changing of the Minds?

The good news is that people can and they sometimes do change their minds. Not to distract from his current predicament, in 2006 Rupert Murdoch, for example, “had a change of heart on climate change and now believes global action is needed.” Also changing his mind on climate change? Bjorn Lomborg who claimed for many years that climate was not an especially important issue to address. Yet in 2010 he released a new book with new equations stating the exact opposite. The indication is that while did change his mind, he hugely underestimates what might be an appropriate scale of mitigation effort. His current thinking recommends that we should spend $100 billion a year to mitigate and avoid the impacts of greenhouse gas emissions. The evidence, however, suggests it should be many times larger. 

In the year just before Lomborg released his book, the American Council for an Energy-Efficiency Economy (ACEEE) released a study on the role of productive investments in mitigating greenhouse gas emissions.  The ACEEE assessment in 2009 suggested that cost-effective reductions in greenhouse gas emissions might require anywhere from $100 to $200 billion per year – in just the U.S. alone. The good news is that the improved energy productivity would save consumers and businesses more money than it would initially cost. Depending on assumptions, climate change policy might be an “economic redevelopment opportunity” which could put anywhere from one to two million more people to work.

The Year of the Reversal

According to Mashable.com, the year 2011 was the year of humility in which we saw a series of epic shakeups in the technology world – including Verizon’s announcement that it would charge a $2 fee for processing payments online. This led to thousands of customers who threatened to leave the service provider if the fee was not changed.  And the good news is that Verizon did reverse its decision just over 24 hours later. At the same time, Netflix planned to divorce its online streaming format from its mailed DVD rental format. It introduced a new service called Qwikster. . . right after Netflix had already introduced a price increase to cover both services. Again, because of customer outrage, Netflix reversed its decision a few weeks later. Netflix now appears to be pursuing a larger variety of online media for customers to stream and this new strategy seems to hold promise for Netflix.

The question naturally arises, if changing your mind does hold more benefit and opportunity, why is it so easy for a lizard to do a 180, but so hard for most of us to drop whatever it is we’ve been doing and turn to a whole new strategy altogether?  There is some interesting science afoot in that regard.

Exploring the Human Motivation

Decision reversals often imply improved outcomes. This seems especially true in the case of our nation’s energy policy. If we turn away from a supply-side mentality and focus, instead, on greatly improving our larger energy productivity, the outcome would be highly positive – as yet another ACEEE study, The Long-Term Energy Efficiency Potential, clearly documents. With a greater emphasis on energy efficiency the U.S. could reduce energy demands by 40 to 60 percent by 2050, even as we strengthen the economy and increase employment by nearly two million jobs. Yet, people show a strong resistance against changing their minds. These are well-established findings, which suggest that changed decisions carry a subjective cost, perhaps by being more strongly regretted than we might first imagine.

As it turns out, reversing a decision leads to discomfort and less satisfaction with decisions, even though going with your gut instinct is often NOT the way to get the “right answer.” For example, going with gut instincts on a multiple choice test will not necessarily get you a better score. Revising your answers, however, generally does tend to result in a better score on your test.  This is called the first instinct fallacy.  Even so, we tend to remain more satisfied with our original decisions, even if they are less correct or accurate.

Norwegian psychology professor Geir Kirkebøen and his colleagues explored this phenomenon in a series of three studies to evaluate whether changing one’s mind would increase post-outcome regret. In a very interesting 2011 paper “Revisions and regret: The cost of changing your mind,” in the Journal of Behavioral Decision Making, the study indicates that “changing one’s mind seems to come with a cost, even when one ends up with favorable outcomes.”  And if the discomfort of changing our mind outweighs the greater impact of climate change, this may be a very real problem for the stability of our global economy.

Melissa Laitner contributed to the research for this essay.  John A. “Skip” Laitner is Director of Economic and Social Analysis for the American Council for an Energy-Efficient Economy (ACEEE), based in Washington, DC.  Tucson is his family’s hometown, and he likely will be there through August of 2012. He hopes to provide a new posting roughly every week over the year.  While these columns do not reflect the official opinion or views of ACEEE, its board or its staff, he can be reached at jslaitner@aceee.org.

Some economists conclude that the best response to climate change is to allow greenhouse gas emissions to keep growing throughout this century, although making sure their growth is slower than under a “business-as-usual” (no policy action) scenario. Others economists say the best policy is to lower emissions quickly, starting as soon as possible, and eliminating all greenhouse gas emissions before 2100. How can scholars using the same basic set of analytical tools come to such radically different policy recommendations?

A new report from the Stockholm Environment Institute uses the CRED model to show how three simple changes can turn a slower-emissions-growth policy into a call for immediate, steep reductions. Here the slower-emissions-growth policy is defined as one that allows carbon dioxide emissions of 5,400 thousand million tons (gigatons or Gt) during the 21^st century. The immediate, steep reductions policy is defined as capping cumulative 21^st century emissions at 2,000 Gt and providing a 4-out-of-5 chance that temperature rise will stay under 2°C. The three changes to the economic model can be described in short as: reason, empathy, and fair play.

The first change, reason, requires understanding and believing the most up-to-date climate science. When climate-economics models start with the assumption that high temperatures and rising seas won’t cause a lot of damage, that’s what their results will reflect. In these models, bringing the relationship between climatic changes and economic damage better in line with current scientific findings increases the importance of lowering emissions.The second change, empathy, involves this generation’s concern about the well-being of future generations. For most countries, climate change’s worst effects will be felt 100 or more years into the future. When models start with the assumption that “human welfare” today and in the near future is almost all that matters, that too is what their results will reflect. Alternatively, if models are programmed to place a high value on the well-being of our children and grandchildren, the result is a greater urgency to stop emissions quickly.

Finally, fair play is a willingness on the part of rich countries to invest in emissions and poverty reduction in poor nations. When models assume that global inequality cannot be changed, then their results will also reflect that. Assuming instead that countries can, and will, help one another to solve the climate problem gives these models more and better tools for lowering emissions, making climate policy cheaper and easier to achieve.

Without reason, empathy, and fair play, climate-economics models do their best to show a path that maximizes human welfare, but they are based on faulty and controversial assumptions. Economists using models with these biases call for a slow, cautious climate policy. This is a “best” response only if you don’t believe the recent climate science, don’t care enough about future generations, and don’t believe that rich countries can, or will, fund emissions reductions in poorer countries.

When instead economists account for reason, empathy, and fair play in their modeling, the best climate policy is clear: share resources to reduce worldwide greenhouse emissions as fast and as far as possible.

Some economists conclude that the best response to climate change is to allow greenhouse gas emissions to keep growing throughout this century, although making sure their growth is slower than under a “business-as-usual” (no policy action) scenario. Others economists say the best policy is to lower emissions quickly, starting as soon as possible, and eliminating all greenhouse gas emissions before 2100. How can scholars using the same basic set of analytical tools come to such radically different policy recommendations?

A new report from the Stockholm Environment Institute uses the CRED model to show how three simple changes can turn a slower-emissions-growth policy into a call for immediate, steep reductions. Here the slower-emissions-growth policy is defined as one that allows carbon dioxide emissions of 5,400 thousand million tons (gigatons or Gt) during the 21^st century. The immediate, steep reductions policy is defined as capping cumulative 21^st century emissions at 2,000 Gt and providing a 4-out-of-5 chance that temperature rise will stay under 2°C. The three changes to the economic model can be described in short as: reason, empathy, and fair play.

The first change, reason, requires understanding and believing the most up-to-date climate science. When climate-economics models start with the assumption that high temperatures and rising seas won’t cause a lot of damage, that’s what their results will reflect. In these models, bringing the relationship between climatic changes and economic damage better in line with current scientific findings increases the importance of lowering emissions.

The second change, empathy, involves this generation’s concern about the well-being of future generations. For most countries, climate change’s worst effects will be felt 100 or more years into the future. When models start with the assumption that “human welfare” today and in the near future is almost all that matters, that too is what their results will reflect. Alternatively, if models are programmed to place a high value on the well-being of our children and grandchildren, the result is a greater urgency to stop emissions quickly.

Finally, fair play is a willingness on the part of rich countries to invest in emissions and poverty reduction in poor nations. When models assume that global inequality cannot be changed, then their results will also reflect that. Assuming instead that countries can, and will, help one another to solve the climate problem gives these models more and better tools for lowering emissions, making climate policy cheaper and easier to achieve.

Without reason, empathy, and fair play, climate-economics models do their best to show a path that maximizes human welfare, but they are based on faulty and controversial assumptions. Economists using models with these biases call for a slow, cautious climate policy. This is a “best” response only if you don’t believe the recent climate science, don’t care enough about future generations, and don’t believe that rich countries can, or will, fund emissions reductions in poorer countries.

When instead economists account for reason, empathy, and fair play in their modeling, the best climate policy is clear: share resources to reduce worldwide greenhouse emissions as fast and as far as possible.

Earlier this year Arizona celebrated the 150th anniversary of the only Civil War skirmish that occurred in Arizona — right there in Picacho Pass. The Union forces lost that particular encounter because of the disobedience of an overeager young lieutenant. They also suffered three fatalities in that fight.

The little bit of publicity I saw about this anniversary only heightened my interest in climbing the peak.  So I set out one fine Friday with a friend to get it done.

Picacho Peak at a Distance

Our very first picture was taken at about 7:30 am in the morning as we approached Picacho Peak from the south on Interstate 10.  At that angle and distance one might begin to wonder, how the heck do we even begin to think that we can actually make the ascent? And if we look at the seemingly insatiable demands for energy, how might we do anything but dig for more coal or drill for more oil?

Almost directly east of the peak and from less than a mile away, we begin to see new possibilities that did not seem to have been there before. After a bit of parallel processing I began to think about Picacho Peak as a useful metaphor for meeting our energy needs – what we see and what we recognize very much depends on where we are standing at some moment in time, as well as what we see in different light and a from different focal point. . . .  And if we simply (or not so simply) shift to a different spot and observe a given feature (maybe the energy conundrum) from another angle, from a different elevation, and even in other daylight, we might see entirely new aspects from what we had first imagined.

Another look at Picacho Peak

It turns out that the way up to the peak requires that we actually move to the backside of this very big outcrop of rock. It’s not for the faint of heart, but the way up is a both a manageable and satisfying result.  In a similar way, if we look at energy not as a problem of inadequate supply, but one that is driven by enormous waste, we can begin to think of different and more cost-effective ways to ease the national concern.

As I’ve written about this before – Red and Blue – What is the Color of Energy? – it turns out that we waste about 86 percent of the energy that we throw at the economic problem.  That means there is a much easier way to manage our energy needs. . . . We can dramatically reduce our waste.  In the same way that it’s easier to go round to the backside of Picacho Peak rather than attempt a technical climb straight up the front side, it will be cheaper and easier to eliminate the inefficient use of the energy resources we already have at our disposal.

About 90 minutes later, yes, hiking up the backside of the peak, we are finally on top, moving onto a saddle that bridges the actual peak, together with a lesser outcrop that is about 300 yards to the south. The final goal is now easily in sight.

Picacho at the Peak

Just as we took a less obvious but much easier way to reach the peak, if we focus on doubling, tripling, or quadrupling our 14 percent level of energy (in)efficiency, it turns out we can more easily satisfy energy demands in ways that actually save us money and create a surprising number of jobs. And in this regard, my ACEEE colleagues and I released a recent report in January, The Long-Term Energy Efficiency Potential: What the Evidence Suggests. In that analysis we show how we might slash energy use by 40 to 60 percent through highly cost-effective efficiency investments. Those investments and the resulting energy bill savings could, in turn, generate up to 2 million jobs while saving all residential and business consumers a net $400 billion per year, or the equivalent of about $2,600 per household annually.

And what, we ask, might be the really big insight from the ascent up Picacho Peak? Instead thinking about a frontal assault on our energy problems, the U.S. would be better off by taking another and more economical way of tackling the problem. In effect, “Thinking Big” about energy efficiency and energy productivity.

John A. “Skip” Laitner is Director of Economic and Social Analysis for the American Council for an Energy-Efficient Economy (ACEEE), based in Washington, DC.  Tucson is his family’s hometown, and he likely will be there through August of 2012. He hopes to provide a new posting roughly every week over the year.  While these columns do not reflect the official opinion or views of ACEEE, its board or its staff, he can be reached at jslaitner@aceee.org.