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Economics, Science - Environment
Thinking on the margin, or why some pollution is better than none
Another economic principle Christian teens (& adults) need to know
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An important aspect of economics is counting the costs of an action or purchase, and, on the flipside, also evaluating the benefit that could result. With these two concepts, cost and benefit, we can understand how people make their decisions. When the benefit of taking an action is greater than the cost, people will take that action.
For example, if buying a soda would bring you $3 worth of enjoyment, but it only costs $1, then you’ll choose to buy the soda. And afterwards, if you’ve had your fill of soda, you might hardly enjoy another soda, and perhaps value it at just a quarter. So of course you then won’t buy it for $1.
What is “marginal thinking"?
This example illustrates the meaning of the concept of marginality. When economists use the term “marginal benefit,” they are referring to the benefit added by the last unit purchased – in this case the last soda.
Another example: when you decide whether to work for another hour, you don’t consider the cost and benefit of all the hours you already worked. Instead, you consider the cost and benefit associated with the final (or marginal) hour under consideration.
So when you “think marginal," then think about the cost and benefit of “one more unit.”
And whether people realize it or not, we all engage in marginal thinking. Imagine you’re deciding to buy an ice cream cone. Let’s say a single scoop cone costs $2, and every additional scoop costs 50 cents. When deciding whether to buy a single scoop you have to compare how much benefit you get from the single cone to the cost of the cone ($2). So long as you value the single scoop cone at more than $2 you buy it. When the marginal benefit of an action is greater than the cost, people will do that action.
What about the second scoop? Well, each scoop is 50 cents, so you’ll choose to buy the second scoop if you enjoy it at a value more than 50 cents. You’ll keep purchasing more scoops but at some point, another scoop just won’t be worth another 50 cents to you, so you’ll stop.
Why does it matter?
So hopefully you understand marginal thinking, because now we have to consider why it matters. Marginal thinking is valuable in all sorts of applications.
For students, marginal thinking can help you prioritize your studying. I always tell my students that, if their goal is a good GPA, they shouldn’t spend much time trying to improve their grade from a 96% to a 98%. Why?
First, both grades are an “A” so the marginal benefit to your GPA is nothing. Also, once your grade is already high, it’s much more difficult to move it up. Therefore, the cost is high and the marginal benefit is low.
Most students would be better off dedicating their time to working on a class where they have a 79% since the cost is lower – just a little more study could boost them up a letter grade – and the marginal benefit is higher.
In Luke 16, Jesus tells the story of a man who manages the money of a rich man. The manager is going to be fired because of his wasteful practices. When he discovers this, he forgives the debtors of his master to make friends before he’s fired. Jesus tells us in Luke 16:8a, “The master commended the dishonest manager because he had acted shrewdly.”
In 16:9 He goes on to give the meaning of the parable, “I tell you, use worldly wealth to gain friends for yourselves, so that when it is gone, you will be welcomed into eternal dwellings.” The point of the parable is not that we should be dishonest in our dealings. Instead, it’s that we should use our resources shrewdly for the Kingdom. Christians are called to be good stewards of the resources we are given, which includes our time. As the studying example above illustrates, effective use of time requires the ability to consider the relevant costs and benefits of a given decision.
There’s a “good” amount of pollution and crime?
Marginal thinking is also valuable when it comes to thinking about policy. Economists have a pithy saying: the efficient amount of anything is not zero. It’s tempting to believe bad things should be eliminated completely. For example, many people would likely support the phrase, “politicians should eliminate pollution.”
But imagine what it would mean to eliminate the very last “units” of pollution. Almost every vehicle, either personal or those used for transporting goods and services, relies on some form of pollution to operate. If we had zero pollution, our grocery stores would receive zero food deliveries because we wouldn’t have semi-trucks, and they would receive zero visits from us, because we wouldn’t have cars. Elimination of all pollution, at least at this point, would result in most of humanity returning to subsistence conditions – the cost is too high, and thus that is a “purchase” we shouldn’t make.
Of course, some pollution should be eliminated. If a factory is dumping toxic waste into a public river, the cost of allowing the pollution to continue is very high.
As strange as it might sound, the efficient amount of crime is also not zero. Imagine how much money and how many resources would need to be spent to ensure zero crime. We’d need a police officer on every street corner 24/7. Think of how high your taxes would need to be to support those pensions! Surely taxpayers have other priorities with higher marginal benefits than preventing some minor traffic violation.
No Nirvana naivete
This sort of logic can be summarized neatly by saying economics as a field is inherently opposed to the Nirvana fallacy. The Nirvana fallacy is the mistake that is made when people compare the real world to an unrealistically ideal alternative.
We would all like to get a grade of 100% in every class and live in a world without crime or pollution. But these are unrealistic desires for this world.
A solid understanding of marginal analysis complements the Christian understanding of our fallen world. When politicians offer us a vision of a world where all bad is eliminated, a clear understanding of marginal analysis provides us with an argument for why such a world is out of reach.
Economists Armen Alchian and William Allen rightly summarize this in the foreword of their book Universal Economics. They say:
“since the discouraging fiasco in the Garden of Eden, all the world has been a place conspicuous in its scarcity of resources, contributing heavily to an abundance of various sorrows and sins. People have had to adjust and adapt to limitations of what is available to satisfy unlimited desires.”
In sum, marginal thinking helps us better understand the nature of our own decisions. When applied properly, this way of thinking provides a more sober view of the important decisions we make in our personal lives and in the public square.
Peter Jacobsen is an Assistant Professor of Economics at Ottawa University and the Gwartney Professor of Economic Education and Research at the Gwartney Institute. He has previously written for both the Foundation for Economic Education and the Institute for Faith, Work, and Economics.
Economics, Science - Environment
Manure into mattresses – we can "create" resources
Economist Julian Simon's key insight is that man's creativity – his brainpower – is a resource that creates other resources. So while some view a rising population as a threat to limited resources ("We're going to run out of oil!") Simon viewed a growing population as a growing resource base. Our brains, when properly applied, could in a reflection of God's own creativity, turn nothing (or next to it) into quite something. For example, when copper – a key element in our phone lines – started getting very expensive, this motivated some smart chaps to develop a much cheaper alternative: sand! That's what our telephone lines are today: Sand (silicon) + Human Creativity = Fiber optic cables Making sand into something is amazing enough, but a much more impressive example of "resource creation" is the way some farmers have turned poop into bedding (or if you prefer alliteration, manure into mattresses). It is quite a story! Rising prices prompts creative thinking Down where I live, in the Northern Washington/Southern BC area, some dairy farmers used to use sawdust as a cheap bedding material for their cows. The cows could sleep in it, poop on it, and the farmer could then come along, clean it out, and put a new layer down. Sawdust clumped together, making it easy to scoop away, but perhaps its most attractive quality was its cheapness. Sawdust used to be viewed as a waste product from the lumber industry – they couldn't give it away and would even bury it. But then creative farmers created a market for this castoff. Or to put it in more mathematical terms: Sawdust + Human Creativity = Cow bedding Some time later, other creative folks started to see more ways that sawdust could be used, including as fuel. Because it originated as a lumber waste product it was cheaper than many other fuel options. So some greenhouses owners figured out a way to use it to heat their buildings, and started to outbid the farmers. This result was this waste product – nothing more than garbage before human brainpower got involved – had so increased in value that farmers could no longer afford it. They needed to find a cheaper option for their bedding! And then it happened. Some ingenious dairy farmer, probably sitting out on his tractor staring out across his manure lagoon, started thinking about the possibilities in all this poop. The result was a separation system that used the undigested fibers found in cow manure. This is fed into a rotating drying drum, where high heat kills the germs, and the output is fibrous bedding material for the farmer's cows. Poop + Human Creativity = Cow bedding Manure has been turned into mattresses! Conclusion Julian Simon was an atheist, so he didn't understand why we have this capacity – why we have a mysterious, awesome ability to use our brains to create something out of nothing. But Simon did recognize Man was more than his mouth; he understood that Man wasn't best understood as a consumer of scarce resources, but that instead Man has an ability (and Christians would add, a calling) to be a producer of plenty. So, in this limited way, Simon has a more accurate understanding of Man than any of his critics. So where does our creative capacity come from? It is a reflection of God's creative Genius. We can't create ex nihilo – out of nothing – like God does, but when we take what was once useless, and put it to productive use, we show ourselves to be His image-bearers....
Science - Environment
Environmental Extremism: a one-world view
Christians know there is another Earth coming **** No intelligent and dedicated Christian wants to dispute the idea that we ought to be judicious about how we conduct ourselves with the planet that God has given us to inhabit and enjoy. Reasonable conservation is, of course, nothing more than good stewardship of those bounties. We applaud efforts at reforestation, preservation of Natural Wonders, and the like. We shouldn't think like the secular environmentalists But our views of the earth ought to collide with those of the environmental extremists who are more concerned about snail darters than about the livelihood of hardworking farmers whose efforts to earn a living are impeded by them. As believers, therefore, it is important for us to consider what God, Himself, has said about the matter. I want to suggest that, in passing, Paul makes an all-important statement in Colossians 2:22a that has been overlooked by many of our people. His words rest upon a worldview that simply is not shared by non-Christians. This dissimilarity in views leads to many of the differences that we find between ourselves and the environmentalists. Here are his words: “These refer to things that are intended to be used up and perish.” In the passage Paul is referring to “ascetic” injunctions concerning fasting, various uses of food, and so on, that unbelievers and Judaizers alike sought to impose upon Christians. Paul would have us refuse to follow them. So, in passing – as I indicated above – he says that the things that the world holds sacred, to the Christian, are but items that God has provided for our use. This Earth isn’t meant to last His point is that when they are “used up” that’s OK (assuming they were used in a responsible manner). It is no great tragedy to deplete the supply of fossil fuels, for a species of unusual fish to become extinct, or for the wolves to be banned from lands where they attack and destroy herds of cattle and sheep. “But that is a tragedy,” says someone. “After all, once they are gone – “used up” as your apostle put it – they are gone forever. To lose an animal species or a rainforest is to have suffered an irreparable loss!” Yes, in that objection, you detect quite a different philosophy of existence. Christians should expect outcries from environmentalists about oil drilling in the Arctic, logging in the West, the use of SUVs on our highways, and similar human activities that they believe will noticeably affect the environment. Such objections to these activities are perfectly in accord with the one-world view of the non-Christian. He would be inconsistent to his basic philosophy of existence if he didn’t raise an outcry. “What, then, are you saying,” asks a Christian? No need to cling Simply this. The unbeliever has but one world. He knows nothing of another world to come. He clings to every aspect of the present world‘s assets because, as he believes, once they “perish” they are gone forever. No wonder he is goes to lengths to preserve all that he can. But the Christian looks forward to a new heavens and a new earth that will be so far superior to the present one that he cannot stake everything on what now exists. He looks on the present world as a marvelous creation, in which God had provided all things for us to use and enjoy now – insofar as we can since it is under the curse of sin. Because of that curse, however, nothing will remain forever. Indeed, the book of Ecclesiastes was written to point out that nothing is permanent. And, in that book, like Paul, Solomon tells us to enjoy what we can so long as we are here and the deteriorating world in which we live continues as it is. The clash in opinions that occurs over various environmental issues is, in reality, a clash of a one-world and a two-world view of existence. Dr. Adams has written more than 100 books, on a variety of subjects. This article was originally posted on the Institute for Nouthetic Studies’ blog (www.nouthetic.org/blog) and is reprinted here with permission. Sidebar: Prioritizing the living over the hypothetical by Jon Dykstra Atheists have no future hope – no eternity to look forward to – so they are desperate to hold onto what they have now. That’s true for the unbelieving environmentalist, and equally so for the unbelieving health food fanatic: one is worried about the planet, the other his own well-being, but in both cases they are willing to go to extremes to preserve what they have because it is all that they have. A Christian knows better. We know that while life is precious and death is an enemy to be fought, we have another life coming. So we take good care of the body God has given us – we eat healthy and exercise when we can – but we don’t obsess about eliminating every last kettle chip from our diet, or worry about whether we’re getting enough of the latest superfood. We need to be good stewards of what God has given us, and that includes our life, but we don’t need to cling desperately to it. When it comes to our planet, Christians know that not only is another Earth coming, there is a chance it might come very soon. The unbeliever thinks this is it and there ain’t no more, so he’s willing to impose huge burdens on this world’s present population in the faint hope it will extend the Earth’s best before date. But what about the good that money could do right now? Consider this: if we knew the world was going to end in a decade – let’s say scientists saw a gigantic planet-killing comet on the way – would we spend trillions in the hope of making the planet a cooler place in 100 years? No, of course not. Then the choice would be obvious and even the unbeliever would want to spend those trillions on helping people right now. Well, we don’t know when the Christ is going to return, but we know it could happen any time. When we are weighing the needs of people today vs. the needs of people in the future, Christians need to place a very important and clarifying modifier before those future folk: we need to understand they are “hypothetical.” Jesus could come back tomorrow; we don’t know if there will still be children being born in one hundred years. Now, regardless of whether Christ returns this century or not, prioritizing the needs of real people over potential people is the right idea. That doesn't mean have no thought for tomorrow. It does mean the future is uncertain, and we don’t know what it brings. What we do know for certain is that there are millions of children today who are living in poverty, and dying from hunger and preventable sickness. If we seek to "save the future" by, for example, adopting carbon taxes to combat global warming, then we will make oil and gas more expensive, and that will increase the cost of food, shelter, medicine and more for the world's poor. We will hypothetically help the hypothetical populations of the future by actually hurting the actual poor of today. The point I'm arguing for here is a limited one. It could be caricatured as, rape and pillage the earth today, and who cares about the consequences for future generations, but that's not what I'm saying. I'm trying to counter a future-minded approach that wants to preserve the planet and does so by hurting the poorest today. But if that's the tradeoff – if it has to come down to hurting people today, or risking doing so to hypothetical populations of the future, then we should be standing up for the living, breathing, suffering, actual people of today even at an uncertain cost for the future....
Science - Environment
The making of the Cornwall Alliance
How did we get our biblical stewardship group going? Editor’s Note: Dr. E Calvin Beisner will be featured in Reformed Perspective’s Spring Speaking Tour “The Grass is Greener” so we wanted to share a little bit about him, and the organization, the Cornwall Alliance, that he heads. **** Where did the Cornwall Alliance for the Stewardship of Creation come from? It is the ongoing result of decades of study by scores of scholars – theologians, scientists, economists, and others – and myself. My own personal background played a major role in shaping it, so let me share that with you. When I was an infant, my father, working for the U.S. State Department, was posted to Calcutta, India. We returned to the States around my second birthday, so I don’t have many direct, personal memories of life there. But two picture memories stand out starkly. The first is of the beautiful tropical garden in the courtyard of the apartment complex where we lived. The second is of the scores of bodies of those who had died of starvation and related diseases, over and around which, early each morning for several months, before trucks came around and picked them up, I walked, hand in hand with my “Aia,” the Indian lady who led me by the hand from my parents’ home several blocks to the home of an Indian family where I spent the day because my mother was paralyzed by a tropical virus that attacked her spine (from which, thank God, she eventually recovered). Over the years, those two memories came to bespeak for me two things: the glories of God’s creation, and the horrors of abject poverty. The Bible speaks about the poor too When I became a Christian, and when in high school I began dedicating my life to the service of Christ, I at first failed to recognize the connection between the Christian faith and either of those two matters. I thought the Christian faith was about nothing but the salvation of sinners – which is indeed the heart of the Christian faith and the most glorious part of it! I witnessed the gospel constantly to fellow students, then to teachers, and to many others, all through high school and college. I studied apologetics so I could answer arguments against the Christian faith. I rejoiced to see the Lord bring many people to saving faith in Christ. Evangelism and apologetics were my almost sole interests. Three years after I finished college with a B.A. in Interdisciplinary Studies in Religion and Philosophy with double minors in Classical History and Classical Languages (in 1978), a pastor friend urged me to read a book about Christian responsibility to care for the poor. I did, and I realized for the first time how much the Bible has to say about the poor. However, I suspected that much of what the author said was mistaken – that he misinterpreted Bible passages, used faulty theological reasoning, and often argued invalidly (as a philosophy student I had studied logic). I didn’t know much about economics, but I suspected that he misunderstood that, too. Yet his book was tremendously influential, so I decided to learn economics to better evaluate the book. I read a lot of textbooks and other studies of economics. Then I earned my M.A. in Society with Specialization in Economic Ethics (International College, 1983) with a thesis focusing on economic ethics. The beginnings of a group Meanwhile, a theologian friend who knew of my prior work in evangelism and apologetics had started the “Coalition on Revival” to help what eventually became several hundred Christian theologians, philosophers, historians, lawyers, educators, psychologists, economists, and other scholars to work together producing “white papers” setting forth the Christian worldview as it applied to each of the major spheres of life. Knowing of my studies in economics, he asked me to chair the economics committee, and I consented. Dr. Marvin Olasky and Dr. Herb Schlossberg, along with about 20 others, were on that committee, and after the third year of our meetings, they asked me to write a book on economics for a series they were editing, and Prosperity and Poverty: The Compassionate Use of Resources in a World of Scarcity (1988) was the result. One chapter was supposed to discuss how population, resources, and the economy interrelate, but as I worked on it, I found that it was far too much to treat in a single chapter. Marvin told me, “Okay, then do a whole book on that.” After two more years, I finished Prospects for Growth: A Biblical View of Population, Resources, and the Future (1990). Becoming a professor When people in the administration and board of trustees of Covenant College read those books (and others I’d written), they invited me to teach. I did, from 1992–2000, as Associate Professor of Interdisciplinary Studies, focusing on the application of Biblical worldview, theology, and ethics to economics, government, and public policy, with special attention to economic development for the poor and environmental stewardship. In late 1999 the trustees and administration of Knox Theological Seminary invited me to teach. As Associate Professor of Historical Theology and Social Ethics (the latter including the ethics of economic development and environmental stewardship) I taught there from 2000–2008. (While teaching at Covenant and Knox, I also earned a Ph.D. in Scottish History (University of St. Andrews, Scotland, 2005–2003), focusing on the history of political philosophy.) Starting in the early 1990s, a variety of religious scholars – Jewish, Catholic, mainline Protestant, and evangelical Protestant – were studying how Biblical ethics should inform environmental stewardship. I was one among many who participated in small colloquia hosted by various groups – the Evangelical Environmental Network, the National Association of Evangelicals, the Ethics and Public Policy Center, the Acton Institute for Religion and Liberty, the Atlas Economic Research Foundation, and colleges and churches – to deliver papers and discuss ideas. From West Cornwall… One such meeting, involving about 30 scholars, took place in the autumn of 1999 in West Cornwall, Connecticut. Following it, several of us thought it would be helpful to create a statement of fundamental principles, and I agreed to draft it. That became, after editing by several scholars, The Cornwall Declaration on Environmental Stewardship, which was released publicly in March of 2000, after it had been endorsed by several hundred prominent religious leaders, and which eventually was endorsed by over 1,500 religious leaders and thousands of lay people. In the summer of 2005, a handful of those who had been instrumental in organizing the gathering that led to issuing the Cornwall Declaration asked me if I would write some articles, speak in various places, and coordinate the building of a network of scholars to promote the basic ideas of the Declaration. I agreed to do it on the side. …to the ISA From that grew the Interfaith Stewardship Alliance (ISA), a loose-knit network of theologians, pastors, other ministry leaders, scientists, economists, other scholars, and policy experts, all donating their time, dedicated to applying Biblical worldview, theology, and ethics together with excellent science and economics to the interrelated challenges of economic development for the very poor and environmental stewardship. Our first major product was An Examination of the Scientific, Ethical, and Theological Implications of Climate Change Policy (November 2005). Over the next two years, ISA functioned as a loose-knit network of people with mutual interests. It had no budget, almost no funding (just small amounts donated by a few individuals), no office, and no staff except myself on a small part-time stipend. But the quality of that first paper, and then of our second, A Call to Truth, Prudence, and Protection of the Poor: An Evangelical Response to Global Warming (July 2006), resulted in our scholars’ being asked to speak for a variety of organizations and in my being asked to give testimony as an expert witness before the U.S. Senate Environment and Public Works Committee (October 2006). New name In 2007 we changed our name to The Cornwall Alliance for the Stewardship of Creation to make our connection to the Cornwall Declaration clear. To respond to rising demand for our teaching and writing, we incorporated The James Partnership, a 501(c)3 non-profit religious, educational, and charitable organization. (Two other organizations also operate under The James Partnership. We were able to hire a part-time assistant, and then in 2008 I left Knox Theological Seminary to divide my time between the Cornwall Alliance and serving on the pastoral staff of a church I had helped plant. We are supported by donations from private individuals and non-profit foundations, not by corporate gifts, and by donations of time and expertise by over 60 scholars in our network, such as the authors of hundreds of articles we’ve published in scores of venues; the speakers for our Resisting the Green Dragon video lecture series and documentary; the author of our book Resisting the Green Dragon: Dominion, Not Death; the scholars interviewed for our Where the Grass Is Greener: Biblical Stewardship vs. Climate Alarmism and other video documentaries; and the authors and reviewers of our major papers, including: An Examination of the Scientific, Ethical, and Theological Implications of Climate Change Policy (2005) A Call to Truth, Prudence, and Protection of the Poor: An Evangelical Response to Global Warming(2006) The Cornwall Stewardship Agenda(2008) A Renewed Call to Truth, Prudence, and Protection of the Poor: An Evangelical Examination of the Theology, Science, and Economics of Global Warming(2010) The Cost of Good Intentions: The Ethics and Economics of the War on Conventional Energy(2011) What Is the Most Important Environmental Task Facing American Christians Today?(rev. ed., 2014) A Call to Truth, Prudence, and Protection of the Poor 2014: The Case against Harmful Climate Policies Gets Stronger(2014), and An Open Letter to Pope Francis on Climate Change(2015). As of this writing (early 2017), with two full-time staff (our Director of Communications and me), one paid part-time staff member (our Director of Donor Relations), and two part-time volunteer staff members, the Cornwall Alliance remains largely a loose-knit network of theologians, pastors, other ministry leaders, scientists, economists, other scholars, and policy experts dedicated to applying Biblical worldview, theology, and ethics together with excellent science and economics to the twin tasks of environmental stewardship and economic development for the poor through writing, speaking, social media, and our websites www.CornwallAlliance.org and www.EarthRisingBlog.com. ***** E. Calvin Beisner will be touring Canada, as part of RP's "The Grass is Greener: biblical stewardship and an age of climate alarmism" speaking tour. Dates and location are below. Can you help us spread the word? Please like and share this post! May 1 – Hamilton Cornerstone CanRC May 2 – Smithville CanRC May 3 – Fergus Maranatha CanRC May 4 – Burgessville Heritage NRC May 5 – Strathroy Providence URC May 8 – Winnipeg Redeemer CanRC May 9 – Lethbridge Trinity URC May 10 – Edmonton Parkland Immanuel Christian School May 11 – Ponoka Parkland URC May 12 – Barrhead CanRC ...
Science - Environment
Environmentalism and marriage?
When I first wrote about a marriage/environmentalism connection ten years ago, there was no need to clarify what I wasn't trying to say. But today it seems only prudent to note that while some people are now pretending to "marry" bits of natures – maybe a tree, or the earth, or as happened with one university group, the ocean – that's not what we are talking about here. There is a marriage/environmentalism connection to be found in the Bible. While it takes some digging to find, understanding this connections helps us understand what God wants from our stewardship of the Earth. We find this linkage in Genesis 2:5b. Young’s Literal Translation of the Bible renders the text a little differently than most other versions. Rather than being told there was no man to till, tend or work the earth, Young reads, “…and a man there was not to serve the earth” (emphasis mine). Serve the earth? This doesn’t seem to make sense when you consider that only one chapter earlier man was told to have dominion over the earth (Genesis 1:28-30). Still, Young’s translation is a legitimate one – the Hebrew word here that is translated as “serve” is translated the same way throughout the rest of the Bible. So how then do we make sense of this call to have dominion, and this verse that tells us we serve the earth? In Exploring the Heritage of John Calvin, Clarence J. Vos makes the point that having authority does not preclude serving. Marriage is an example of this. A husband is given authority over his wife but must love her like his own body, and must love her as Christ loves the church (Ephesians 5:21-33). He is given authority but must use that authority to build up his wife and family. This idea of "serving authority" makes sense in nature as well. It is our job to rule it, and our responsibility to take care of it as well. This "serving authority" sets Christian environmentalists apart from our secular counterparts who certainly wish to serve nature, but don’t believe Man should have dominion over it....
