Pascal’s Wager

Creating the frame for making choices

Tim O’Reilly observes that Pascal’s wager is a significant expression of decision theory when faced with a choice of what to believe when reason or science fails to provide a definitive answer. It is a simple and effective way to reason about contemporary problems like climate change.

We don’t need to be 100 per cent sure that the worst fears of climate scientists are correct in order to act. All we need to think about are the consequences of being wrong.

Let’s assume for a moment that there is no human-caused climate change, or that the consequences are not dire, and we’ve made big investments to divert it. What’s the worst that happens? In order to deal with climate change:

1. We’ve made major investments in renewable energy. This is an urgent issue even in the absence of global warming, as the International Energy Agency has now revised the date of “peak oil” to 2020, only eight years from now.

2. We’ve invested in a potent new source of jobs.

3. We’ve improved our national security by reducing our dependence on oil from hostile or unstable regions.

4. We’ve mitigated the enormous off-the-books economic losses from pollution. China recently estimated these losses at 10 per cent of GDP. We currently subsidize fossil fuels in dozens of ways, by allowing power companies, auto companies, and others to keep environmental costs off the books, by funding the infrastructure for autos at public expense while demanding the railroads build their own infrastructure, and so on.

5. We’ve renewed our industrial base, investing in new industries rather than propping up old ones. Climate skeptics like Bjorn Lomberg like to cite the cost of dealing with global warming. But these costs are similar to the “costs” by record companies in the switch to digital-music distribution, or the cost to newspapers implicit in the rise of the Web. That is they are costs to existing industries, but they ignore the opportunities for new industries that exploit the new technology. I have yet to see a convincing case made that the costs of dealing with climate change aren’t principally the costs of protecting old industries.

By contrast, let’s assume the climate skeptics are wrong. We face the displacement of millions of people, droughts, floods, and other extreme weather, species loss, and economic harm that make us long for the good old days of the current financial-industry meltdown.

Climate change is really a modern version of Pascal’s wager. On one side, the worst outcome is that we’ve built a more robust economy. On the other, the worst outcome really is Hell. In short, we do better if we believe in climate change and act on that belief even if we turn out to be wrong.

But I digress. The illustration has become the entire argument. Pascal’s wager is not just for mathematicians, nor the religiously inclined. It is a useful tool for any thinking person.

Tim O’Reilly
Pascal’s Wager
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