Distorted Communication

Investors grapple constantly with imperfect knowledge in many sectors, and uncertainties appear particularly acute in the field of climate. The scientific consensus claims that human activities are a major cause of climate change. A similar number of voices claim the opposite – or so you would think from reading the mainstream US media.

Each time the mainstream scientific consensus moves forward, the “climate change is bunk” chorus bursts into song. The US media persistently create the appearance of wider debate on the subject than actually exists among scientists.

Pseudoscience and long-exploded theories get equal time alongside the work of more corroborated scientific work. Until recently, honorable skeptics (a dwindling band) and anti-environmental shills have shoved the majority of scientists to the margins.

Investors must sift through the many screens of distorted information.

To cite the most recent example. The UN created the Intergovernmental Panel on Climate Change (IPCC) to periodically state the scientific consensus in a format friendly to policymakers. But each time the IPCC releases a new assessment (as they just have in February), the band of naysayers weigh in.

The UK’s Stern Review Report on the Economics of Climate Change is a similar case. Stern argued that the costs of acting on climate change were lower than feared. He also made a strong case that the benefits of mitigation and adaptation would be greater than anticipated.

However, the discussion of Stern’s optimistic view soon bogged down in some technical chin-stroking about the discount rate he used. The media are receptive to Cassandras who wail that responding to climate issues is too costly. Say they, taking any action would kill off economic growth for decades. A more careful analysis suggests otherwise.

More recently, the New York Times published an article on the supposed factual errors in Al Gore’s documentary An Inconvenient Truth. The actual criticisms by scientists of the Oscar-winning documentary’s flaws were minor, but the Drudge Report trumpeted the piece as a knock-down attack on Gore. For a dry-eyed and detailed assessment of the documentary and the latest non-controversy by some actual scientists, see what some actual climate scientists have said..

Distorted communication will no doubt continue. It may even get more shrill as the number of scientists who doubt the consensus grows smaller and smaller. But chorus has regular patterns, and astute investors can learn to recognize the song and make their choices accordingly.