What Anti-Nuclear Activists Can Learn from the Federal Reserve
Yesterday, a good friend e-mailed me a copy of the Nuclear Energy Information Service (NEIS) press release that was issued in response to a new National Academy of Sciences study that concludes that “a preponderance of scientific evidence shows that even low doses of ionizing radiation, such as gamma rays and X-rays, are likely to pose some risk of adverse health effects.” She added a note to the effect that NEIS is “undermining what they are doing by being so emotional and dramatic”, and I must agree. I’ve been critical of NEIS before for much the same reason.
The NAS study [pdf brief] doesn’t reflect a shift in the thinking about radiation, it simply reaffirms the prevailing scientific view: all exposure to ionizing radiation carries with it a certain probability, that rises linearly with intensity and duration of exposure, of causing genetic mutations. Those genetic mutations, in turn, pose a certain probability of resulting in the development of cancer.
The core finding of the study, that there exists no completely safe threshold for radiation exposure, was bound to be misinterpreted by anti-nuclear groups, and the NEIS press release did not disappoint: “NAS PANEL TORPEDOES THE SELF-PROCLAIMED ‘NUCLEAR RENAISSANCE’”, the release begins. Their argument, that increased reliance on nuclear energy would result in more negative health effects on the margin, is quite true:
“The more nuclear plants you build, the greater the exposure to the public and the workforce from accidents and allowable releases. There’s just no escaping it – more nuclear plants will lead to increases of cancer and other health effects,” Kraft states.”
However, from this observation to the conclusion that nuclear energy needs to be taken off the table as a part of any possible solutions to the United States’ energy problems or global warming is quite a leap.
The fundamental problem with NEIS’s position is that it is the product of a form of thinking that derives more from the flawed “precautionary principle” than from a benefit-cost analysis. By using inflexible decision-making rules rather than performing an honest risk analysis, NEIS is reaching policy conclusions that, if adopted, would likely do more harm than good.By declaring that greater use of nuclear power would lead to an increase in negative health effects from nuclear power, NEIS isn’t saying much at all. It’s true that increased use of anything that carries with it any negative health effects will result in a marginal increase in negative health effects from that source. It’s not necessarily the case that public health will be negatively impacted overall, though. Additionally, while having five times more nuclear power plants would likely translate into five times the risk from nuclear power production, this says nothing about the overall risk posed by a certain number of nuclear plants, and thus nothing about the marginal risk of adding new plants.
If NEIS succeeded in permanently halting production of new nuclear plants, from where would the rest of the nation’s energy consumption come? As I’ve noted before, without the use of nuclear energy, it would be impossible to effectively address global warming; some conservation measures and some increase in the use of renewables would help, but this wouldn’t come close to closing the gap. The most likely source of additional energy production, based on the economics of the problem, would be coal. Coal power plants release, among other things, radioactive elements, mercury, and particulates, all of which cause negative health effects. Thus, to the extent that nuclear energy displaces coal, it reduces the negative health effects of coal (not to mention the global warming issue). On the margin, then, the use of nuclear energy could potentially improve public health, compared to the other options.
With respect to the overall risk posed by any given number of nuclear plants, it’s worth drawing attention to a part of the NAS study that NEIS completely ignored: that human activity is responsible for 18% of an average American’s total radiation exposure, and that of all the radiation exposure resulting from human activity, only 1% is from the nuclear fuel cycle. Thus, only about 0.18% of the radiation so denounced by NEIS is actually the product of the use of nuclear energy. While this figure would surely rise if more nuclear plants were built, the cancer risk from nuclear energy would still be dwarfed by the risk from chest x-rays, nuclear medicine, and radiation from space. More importantly, the increase in marginal risk would be quite low, low enough that the risks would more than balance against the health benefits from decreased reliance on coal, let alone the other economic benefits.
While writing this, I noticed that one of my regular weblog reads has a link to a critique of the “precautionary principle“. The Wikipedia link I’ve provided is flawed in its own critique of the principle, but it offers a fairly thorough, if biased, discussion of the concept. The precautionary principle itself is flawed in that its core is its requirement of proof that an action will have no (or exceedingly minimal) negative consequences to justify that action. This standard is both irrational and impossible to meet. It’s impossible to meet in a theoretical sense in that it is simply logically impossible to prove a negative, and in a more practical sense, it essentially asks that any proposed action be delayed indefinitely until every possible criticism has been addressed. This is obviously not an optimal model for decision making under uncertainty, and in a political system, such an approach can only lead to paralysis.
The opposite approach is equally flawed, in that it requires positive proof that an action will prove harmful to prevent that action, which again shows an immaturity in dealing with risk, and has (and will in the future) led to serious negative consequences (consider the widespread use of lead in consumer products and gasoline).
Instead, a benefit-cost approach designed to address uncertainty makes the most sense. For each possible course of action, one should consider the possible costs and benefits of that action, and then attempt to determine the likelihood that each possible benefit or cost will actually occur. Given the results of this analysis, which would essentially be a set of potential net benefits adjusted for risk, one need only choose the course of action that would return the highest risk-adjusted benefits. If this sounds eerily like the stock market, that’s because both are examples of people trying to make the best possible decisions without being able to see into the future.
One might argue that the stock market isn’t a decision making body (perhaps while conceding that it is a body of decision makers), and that this model only has limited relevance to making public policy decisions, but there exists a great example of a body that makes important decisions in precisely this way: the Federal Reserve. In a great paper titled “What Central Bankers Could Learn from Academics– and Vice Versa”, Alan Blinder discusses something known as the “Tinbergen-Thiel” approach, which is framwork for making decisions about monetary policy. This approach asks that policymakers first set goals in the form of targets for inflation rates and unemployment. What the approach asks next, however, is what makes it a great model. Inflation and unemployment are negatively related; as inflation increases, unemployment decreases, and vice-versa. Thus, central bankers face an explicit tradeoff: in an attempt to reduce inflation to a more desirable level, they will make backward progress on unemployment; if they try to reduce unemployment towards their target, they will increase inflation. Thus, the basic “Tinbergen-Thiel” approach essentially asks central bankers to set interest rate targets (implicitly or explicitly) that will minimize the total social harm caused by both unemployment and inflation– to balance the marginal costs of moving the interest rates up or down.
Having explained that without saying “L = (u – u*)^2 + a(i-i*)^2″, I feel good about myself, but you (the reader) are probably asking yourself why you care.
Here’s why: imagine that the central bankers go into their Federal Open Market Committee meeting one day and decide that inflation above their target level poses a very real (it is non-zero, after all) risk to the economy, and that this risk of inflation cannot be tolerated. Bonds are dumped on the open market, the money supply is decreased and interest rates climb, the economy heads south faster than retirees in October, and suddenly the nation doesn’t like Alan Greenspan (or maybe at this point, Ben Bernanke) very much anymore. Imagine now that the nation gathered around the FOMC members, called them names and kicked sand at them, and made the FOMC members reduce unemployment to the target level, since obviously, unemployment carried very real risks and thus could not be tolerated. Stuff then happens, suddenly the nation is facing massive inflation, and everybody feels pretty lousy all-round.
The point is that central bankers do a fairly good job on a regular basis of assessing risks and balancing them– a mature and sustainable approach. What they do not do, thankfully, is focus on the risks posed by a single course of action and declare that course of action unacceptable without considering the risks posed by all the other alternatives. If they took this approach, it would lead to some rather undesirable outcomes. The same is true for any public policy issue, including energy policy. The anti nuclear-crowd and others would do well to take a page from those stuffy old economists.