A powerful social law suggests we often explain or do things the wrong way. This may be particularly true when we try to address Global Warming.

Gilling’s Law, one of the most powerful laws in the social sciences, states that the way you score the game shapes the way it is played.* A simple example is that once rugby was boring with a typical score of 9 to 6 – three penalties to two. Later the score for a try was raised from three points to five, bonuses were given for scoring a lot of tries (and also to a loser who gets close to the winner). The changed incentives led teams to take risks to score tries with the result of much bigger scores and a livelier game.

The law applies to many other social events besides sport. There were four instances, all in politics, on the day before I drafted this column. An article on India did not observe that while Nareeda Modi’s National Democratic Alliance won an overwhelming majority in parliament – 336 seats out of 543 –it won only 39 percent of the vote. (Indeed, the BJP party – the largest element of the coalition – won 52 percent of the seats with 31 percent of the votes.) Adjust for turnout and the NDA won 26 percent of those on the electoral roll (the BJP 20 percent). While the article, based on the seat score, said a lot about the power of the government, its underlying assumption that Modi had a majority of the country behind him was hardly compelling.

Similarly, discussions on Donald Trump’s support from the American public ignore that while he won a majority of the states to become president, more people voted for Hillary Clinton. Adjusted for turnout Trump won 26 percent of eligible voters.

The (confusing) Brexit discussions rightly observe that the Leaves won slightly more votes that the Remains but usually fail to mention that they won over only 37 percent of eligible voters. Yet, as in the previous cases, the commentators write as if the winner had the support of the majority (often they write as if it is the vast majority) of the population.

New Zealand’s political commentators do not make quite the same mistake because of MMP. But have you noticed how often they confuse party size with political outcome? I do not think they are doing so just because they support National which promotes a grievance that the largest party has not formed the government. It is also easier to score according to party seats (or, in opinion polls, potential party seats) than to think about coalition government. It is no surprise that voters switch among the three parties of the coalition; like the Red Queen they may well have six conflicting thoughts before breakfast. (Commentators on polls usually highlight shifts smaller than known sampling errors, scoring the numbers as if they are perfectly accurate.)

Once alert to Gilling’s Law, one sees its relevance in many places; a powerful social law should apply almost everywhere. For something entirely different, consider global warming arising from carbon emissions by human activities.

The scoring system arises from the obvious way to measure the carbon emissions is at the point where they are emitted. But the measure may not be the best way to think for analytical or policy purposes. Scoring on the measure can lead to some odd results.

For instance, New Zealand imports carbon in oil. When it is used as petroleum, the carbon emitted (mainly as carbon-dioxide) enters the atmosphere and contributes to global warming. The emissions are scored to us, not to the producers of the oil. Fair enough, you say. But why then do some object to drilling for oil since the output is not scored as an emission?

Won’t any hydrocarbons, if found, be used in New Zealand and so the carbon will be emitted here? But any domestically sourced hydrocarbons will displace imported oil and so not add to New Zealand’s emission score. (If the wells produce gas which displaces oil, the score will come down.) This is not to argue against the drilling ban; in my view there are moral (and prudential) reasons for discouraging searching for oil. The point is that the scoring system leads to paradoxes. 

An even more confusing instance involves our food exports. Recall that the carbon emissions from oil are not attributed to the oil producer but to the petrol consumer. In the case of foodstuffs it is the other way around.

New Zealand farms (let’s focus on dairying, the biggest emitter) generate carbon that contributes to global warming (the biggest source is methane from belching cows). So the calculation for the New Zealand’s carbon emission target includes farm carbon emissions.

But about half of farm product is exported (dairy is more like 85 percent). So half, or more, of its domestic emissions are attributed to a product consumed overseas. In what sense are we responsible for those emissions?

Contrast what happens to imports, the production of which may involve a lot of carbon emissions in their production. There is no penalty on the New Zealand consumer for this contribution to global warming. The parallel with oil producers is not exact, but you could argue that by analogy they should be scored with the carbon emissions their oil generates.

One of the consequences of this odd measure is that were New Zealand to stop dairy production, our total carbon emissions would decline. But the deficit in dairying would be made up elsewhere and, because that dairying is more energy intensive, the world’s carbon emissions would rise. The paradox arises because we have not thought through the difference between the best way to measure carbon emissions and what to focus on in order to reduce them. Measurement is undoubtedly best done on the production side but the reduction may well be better tackled on the consumption side – or on both. Note that pressures on the consumption side will not only have people choosing products with lower carbon emissions but their decisions will press back on producers, forcing them to seek technologies which lower their carbon emissions.

It is the scoring system which focuses us on the production side through an emissions trading scheme. Were we more consumption-oriented we would probably introduce a carbon tax on consumption based on the emissions generated producing the product. It would be rebated on exports and levied on imports.

I happen to be a fan for a carbon tax but I do not think we are going to get one. (The proceeds would be used for preparing for the consequences of the climate change that is going to occur, such as sea-level rising and storm surges.) A production side-scoring system, set by the international agreement, shapes the game in the wrong way. We are going to have to settle for 9 to 6 scores.

 

* Don Gilling, a personal friend, is a retired professor of accounting and finance. His law appears in various forms in overseas writings but none are as comprehensive or as elegant as his,

Comments (5)

by Pat on May 10, 2018
Pat

Or we could simply admit that the change required is so radical it needs to be adressed from both the demand and the supply side and focus on the goal rather than the rules, which, as rugby has discovered are constantly evolving (incidentally, to the detriment of the game but then thats what happens when money is the driving force)

by barry on May 10, 2018
barry

It would clearly be better to count emissions when the fuel is produced, the same as trees are counted when they are cut down, not when burned.

Anyone who then locks away the fuel (perhaps reinjecting it) could gain credits.  Othewise it is sure to get burned at some stage.  It is is also harder to track it later.

As for food.  The carbon emitted on producing the food does not go with the food.  It it becoming possible and fashionable to be able to track a particular item of food from the farm, but at present it is only possible with the most expensive items.  In general a consumer has no way of knowing the carbon cost of a particular item.

Far better to make the producer pay, and factor the cost into the price.  If the whole world has the same carbon accounting then carbon efficiency will be an important competitive advantage.

But yes, I agree a tax is easier and fairer.

by Rab McDowell on May 12, 2018
Rab McDowell

Gilling’s Law i.e.  you play to the score card. Sounds much more ethical than gaming the system but that’s the way the world works. It plays both ways.
When NZ had FPP, the popular vote did not always support the winning party. But that was because parties played to the score card and concentrated on the swing electorates. There was no point National campaigning hard in Wellington Central or Labour doing the same in Southland. The score card rewarded electorate seats, not the popular vote, so the popular vote was irrelevant, no matter what the supporters of the losing side thought.
When we shifted to MMP the score card changed and now parties campaign everywhere for the popular vote. It doesn’t mean results are now more “democratic” than before, it just means there is more than one way to exercise democracy.
In the USA the score card rewards electoral college votes, so the parties play to that score card. If popular votes were the key the game would be played differently so the outcome may well be different.
NZ changed from FPP to MMP by changing the law. The USA is a federation of states so changing to a popular vote system requires a rewrite of the constitution and of the relationships between states. Never going to happen.
So, as for NZ under FPP, for the losers to complain that they received the most popular votes is an irrelevant distraction.


Applying Gilling’s Law to emissions may be a nice theoretical exercise but it what it does is distract minds that are intellectual rather than intelligent from the real consequences of trying to ban fossil fuels.

Just one of the consequences. The WHO estimates that 4.3 million people, mostly in developing countries, die annually from indoor pollution, mainly from burning “renewable” energy sources such as crop residue, dung and wood. Banning fossil fuels will continue that death toll rather than allowing them to shift to cleaner burning energy and prevent them from rising out of abject poverty through cheap energy.

by Charlie on May 12, 2018
Charlie

In the case of the cessation of gas explorations, the loss of our national gas resource will actually increase our emissions.

This is because many industries rely on gas to power them and hundreds of thousands of homes rely on gas to heat them.

So when our gas supply expires we will have to import gas to replace it. And the act of importing gas by ship consumes more energy, which in the case of shipping means burning high suphur bunker oil.

It may be that those industries that use gas decide to decamp from NZ to more fertile pastures, in which case we will have to import the products they produce. Thus burning even more fuel. For example glass manufacturers use natural gas to heat their furnaces. So either they must import the gas or move offshore and we import the bottles for our wine industry.

A classic example of technical and economic illiteracy by the Greens and Labour!

 

 

by Chuck Bird on May 13, 2018
Chuck Bird

It is as likely to be colder than warmer in 2050.  Have look at the Great Global Warming Swindle.

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