11–16 of 16 posts
Analysing everything with the "economic rationality" goggle just makes you blind to the world
> Create futures of earth not warming more than 2°C in the next 3 decades, let all the climate skeptics put money where their mouth is and buy these futures. What's the motivation for them to do so?
Well, the OP says: > "All the people who are working on solving climate change can short these futures and have an incentive to work on these problems." But I think they either misunderstand or misstate how the futures would be created. Someone needs to actually issue the futures, and I'm not sure who would do it; these 'futures' contracts seem more like straight bets than actual futures. In any case, you'd need some…
You're right I didn't mention specifics of on who would create these. A naive answer would have been "why not anyone?", but you bring up an interesting point on who would actually hold the bet for a long duration of time and be guaranteed for pay-offs.
I disagree with the problem of enforceability of the paying out in case someone looses a long position, since it's also a current problem with the standard futures for stocks/commodities, where the brokerage firm would be liable for paying up in case of defaulting on a margin call, so similar structure might be imagined for these cases.
With regards who might create these futures, the government seems like a good candidate, but really if we do have a solid clearinghouse with similar structure for handling margin calls etc. I don't see why not anyone can create these.
The regulatory concerns for implementing these is very valid, but I was primarily just interested in exploring the idea.
The climate change example has a hole in the form of people who neither believe nor disbelieve that the temperature will rise or fall, or that it's caused by man or that it's adressable by man, but simply don't agree it's necessarily a problem either way. They aren't necessarily saying the temp won't rise or that the climate and landscape and bioscape won't change. It's possible to simply not have a problem with any…
haha yeah, you're right I could have been more clear on why I thought there was a need for it.
One way to look at it (though might not be a strong argument) is even with the current regulatory framework, the incentives are not aligned. So I don't think regulation is a way to align incentives rather it acts as a floor of what should be acceptable behavior.
The reason why I think a regulatory stop gap is needed is, when a problem doesn't have enough momentum towards it, it's much easier to make a problem worse than to make it better and regulation acts as a valve by indicating the directional progress we want to make and prevent making it worse at least until there is sufficient momentum that progress from the problem is clearly much better than the alternative.
That said, I think for the problems I used as examples in the article the current mechanisms and the current framework we have are sufficient, and possibly no new regulation needs to be taken. (i.e, for the case of doctors, we already have pretty good mechanisms to prevent doctors from creating actual harm, for climate change we already have limits on carbon emissions, etc.)
I think it's good to see some novel ideas in this space. I'm having trouble imagining it actually working out with things like healthcare, though, because of difficulty in defining the futures, or because some things are more likely to progress or get worse on their own, or independent of the provider. I think it's a real and interesting problem, and find this idea intriguing but my intuition is that it wouldn't work…
Yep, this is the reason why I think we should continue to have a regulatory stopgap to provide a floor for acceptable behavior
> Create futures of earth not warming more than 2°C in the next 3 decades, let all the climate skeptics put money where their mouth is and buy these futures. What's the motivation for them to do so?
I actually find it hard to believe something like this isn't already on a prediction market somewhere.
Earlier quoted context omitted.
I'm assuming you're question is why would they buy the futures? If they really believe that climate change is not real, then they would benefit from owning the futures which pay off when if the climate really doesn't warm more than 2°C in the next 3 decades.
Who would pay those futures off, and why would someone believe they would do so?