by Chloe Rodman

Yale University economist Robert Shiller (2015) explains how global warming can be slowed by a combination of idealism and economics in his article “How Idealism, Expressed in Concrete Steps, Can Fight Climate Change” for the New York Times. Little progress has been made regarding climate change and global warming. There have been many international conferences in the past few decades but they have been relatively unsuccessful in creating reasonable climate solutions or taking action. Economists have cited externalities as the cause for such large-scale inaction. People and governments have been unresponsive when asked to counter the negative externalities of climate change, such as pollution, by bicycling to work, turning off lights, creating regulation laws, or implementing other sustainable actions. However, in the rare occurrence that communities or people do decide to act, the positive externalities of these actions are consumed by free riders. The free-rider problem has been significant, where the benefits (cleaner air, for example) of sustainable actions are shared by every nation and every person, but the costs rest solely on the shoulders of people who decide to make a change in their daily lives. This free-rider problem reflects traditional economic theory, which states that most citizens and nations will decide not to make a change, because they believe that they can benefit from the change the few are making with no cost to themselves. Continue reading →