Tuesday, August 28, 2007

The Dirty Secret Behind "The Dirty Secret Behind America's Energy Future"

Jeff Godell's book, "Big Coal: The Dirty Secret Behind America's Energy Future," has gotten a resurgence of media attention in recent days because of the events that have transpired in the Utah mine tragedy and the more recent tragedy of a similar nature in China. One of the things Godell blasts the coal industry for is safety (hence the newfound media attention). Now, if you've read my other posts on energy, you'll know that I'm no blind defender of Big Coal. I am, however, a big fan of making sure that if I'm going to pour my outrage, and that I target it where it will do the most good.

Around the time of a BIG EVENT with LOTS OF MEDIA, nearly every politician has to make sure they are on the public record "saying the right thing," and showing the appropriate amounts of outrage over the incident, resolve to do more from now on, and contrition that nothing was done sooner that would have saved the lives of the noble citizens who met their ultimate demise. But do we mete out our attention, sympathy, outrage and action equally? Well, OF COURSE NOT. It's a "law of small numbers" thing (the principle comes from the properties of the Poisson Distribution of statistics and referenced in Thomas Pynchon's fictional novel, "Gravity's Rainbow"). Basically, the way I'm going to apply it is to say that because certain events are so unexpected generally, that when they do occur they tend to grab our attention and affect behavior disproportionately to their risk of occuring again. My point is, there are hundreds of on-the-job fatalities every year (over 1400 in manufacturing) and almost none of them make Headline News. Why? They're just too damn common to be newsworthy! Hence, there is almost no public outcry for the government to take action. It's kind of like flying versus driving-- people are terrified of planes even though it's widely known that driving is statistically much more risky. (Again, there are so many damn car wrecks there's no way the news is going to start sending crews to them...) Does the fact that a certain type of fatality is more "common" or "mundane" make it less tragic?

Back to mining... Have I mentioned that economists like to back stuff up with data? So, the Coal mining industry actually has a much LOWER incidence of on-the-job fatality than the general manufacturing sector (according to the Bureau of Labor Statistics, manufacturing had about 3 fatal incidents per 1,000 workers in 2006 whereas coal had about 0.8 per 1000 workers). So, even if, as Mr. Godell asserts, coal accidents increase drastically over the next several years, it is unclear that our regulatory efforts are best-placed in that sector. It is conceivable that many more lives would be saved by fortifying safety regulations in a more general way rather than targeting coal. Not only that, it seems to me that the dangers of mining coal underground are not unforseen, so miners who choose that line of work are making an informed choice-- and are compensated for the perceived risk. In fact, despite a lower incidence of fatalities, COAL miners out-earn their colleagues in the manufacturing sector by about $7 per hour.

So, with all of this in mind, where should we spend our regulatory dollars? In coal, where there were just 78 fatalities in 2006, and incidents were relatively rare, or in the manufacturing sector or in a more general way altogether, where there are far more fatalities (and lives that could potentially be saved), but far less media attention? Should the media's crocodile tears and misinformation dictate where our tax dollars are spent? Maybe I'm a jerk, but as my students know, I want to make sure that I get the most "Bang" for my buck.

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