Incentives and Technology

The invaluable Mark Thoma leads me to this post attacking what I thought was a totally obvious takedown of Roger Pielke Jr.. In general, reading attacks on oneself should be done in very limited doses, but in this case I learned something — namely, that what I assumed was obvious apparently isn’t to everyone.

So, we are told that

Krugman seems to believe that by sprinkling the fairy dust of incentives over society the emission busting new technologies will emerge.

Um, no. There has been a lot of theorizing about induced innovation, but it’s not solidly grounded in empirical evidence and was not at all what I was talking about. I was talking about the fact that at any given time we have a choice of already existing technologies. You can drive a conventional SUV, but you could also drive a hybrid, or for that matter a smaller vehicle that, say, emits half as much carbon as the SUV while providing services that are a lot more than half of what the SUV would provide. You can generate electricity using a coal-fired plant, but you can also use a gas-fired plant, a wind turbine, or solar panels.

None of these are technologies that need developing; they’re already here and in fairly widespread use. And do you really want to deny that which technology people choose is affected by incentives?

Mea culpa: I thought this was totally obvious, and didn’t imagine that anyone could be confused about this, or seriously argue with the proposition that energy use involves choices. But I was wrong: it turns out that people can get confused about such things, and even convince themselves that they are being deep and sophisticated while doing so. So I’m grateful to be enlightened.