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By Andrew T. Guzman

A few days ago, the President of the United States used the State of the Union address to call for action on climate change. The easy way to do so would have been to call on Congress to take action. Had President Obama framed his remarks in this way, he would have given a nod to those concerned about climate change, but nothing would happen because there is virtually no chance of Congressional action. What he actually did, however, was to put some of his own political capital on the line by promising executive action if Congress fails to address the issue. The President, assuming he meant what he said, has apparently accepted the need for a strong policy response to this threat.

Not everybody agrees. There has long been a political debate on the subject of climate change, even though the scientific debate has been settled for years. In recent months, perhaps in response to Hurricane Sandy, the national drought of 2012, and the fact that 2012 was the hottest year in the history of the United States, there seems to have been a shift in the political winds.

Oblique view of Grinnell Glacier taken from the summit of Mount Gould, Glacier National Park in 1938. The glacier has since largely receded. In addition to glacier melt, rising temperatures will lead to unprecedented pressures on our agricultural systems and social infrastructure, writes Andrew T. Guzman. Image by T.J. Hileman, courtesy of Glacier National Park Archives.

In 1969, Elizabeth Kubler-Ross described the “five stages” of acceptance:  denial, anger, bargaining, depression, and acceptance. For many years, climate change discussions seemed to be about getting our politics past the “denial” stage. Over time, however, scientific inquiry made it obvious that climate change is happening and that it is the result of human activity. With more than 97% of climate scientists and every major scientific body of relevance in the United States in agreement that the threat is real, not to mention a similar consensus internationally, it became untenable to simply refuse to accept the reality of climate change.

The next stage was anger. Unable to stand on unvarnished denials, skeptics lashed out, alleging conspiracies and secret plots to propagate the myth of climate change. In 2003, Senator Inhofe from Oklahoma said, “Could it be that man-made global warming is the greatest hoax ever perpetrated on the American people? It sure sounds like it.” In 2009 we had “climategate.” More than a thousand private emails between climate scientists were stolen and used in an attempt (later debunked) to show a conspiracy to fool the world.

Now, from the right, come signs of a move to bargaining. On 13 February, Senator Marco Rubio reacted to the President’s call for action on climate change, but he did not do so by denying the phenomenon itself or accusing the President of having being duped by a grand hoax.  He stated instead, “The government can’t change the weather. There are other countries that are polluting in the atmosphere much greater than we are at this point. They are not going to stop.” Earlier this month he made even more promising statements: “There has to be a cost-benefit analysis [applied] to every one of these principles.” This is not anger or denial. This is bargaining. As long as others are not doing enough, he suggests, we get to ignore the problem.

It is, apparently, no longer credible for a presidential hopeful like Senator Rubio to deny the very existence of the problem. His response, instead, invites a discussion about what can be done. What if we could get the key players: Europe, China, India, the United States, and Russia to the table and find a way for all of them to lower their emissions? If the voices of restraint are concerned that our efforts will not be fruitful, we can talk about what kinds of actions can improve the climate.

To be fair, Senator Rubio has not totally abandoned denials. While engaging in what I have called “bargaining” above, he also threw in, almost in passing, “I know people said there’s a significant scientific consensus on that issue, but I’ve actually seen reasonable debate on that principle.” In December he declared himself “not qualified” to opine on whether climate change is real. These are denials, but they are issued without any passion; his heart is not in it. They seem more like pro forma statements, perhaps to satisfy those who have not yet made the step from denial and anger to bargaining.

If leaders on the right have reached the bargaining stage, the next stage is depression. What will that look like? One possibility is a full embrace of the science of climate change coupled with a fatalistic refusal to act. “It is too late, the planet is already cooked and nothing we can do will matter.”  When you start hearing these statements from those who oppose action, take heart; we will be close to where we need to get politically. Though it will be tempting to point out that past inaction was caused by the earlier stages of denial, anger, and bargaining, nothing will be gained by such recriminations. The path forward requires continuing to make the case not only for the existence of climate change, but also for strategies to combat it.

The final stage, of course, is acceptance. At that point, the country will be prepared to do something serious about climate change. At that point we can have a serious national (and international) conversation about how to respond. Climate change will affect us all, and we need to get to acceptance as soon as possible. In short, climate change will tear at the very fabric of our society. It will compromise our food production and distribution, our water supply, our transportation systems, our health care systems, and much more. The longer we wait to act, the more difficult it will be to do so.  All of this means that movement away from simple denial to something closer to acceptance is encouraging.  The sooner we get there, the better.

Andrew T. Guzman is Professor of Law and Associate Dean for International and Executive Education at the University of California, Berkeley. His books include Overheated: The Human Cost of Climate Change and How International Law Works, among others.

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By John Knowles

If you become wealthier tomorrow, say through winning the lottery, would you spend more or less working than you do now? Standard economic models predict you would work less. In fact a substantial segment of American society has indeed become wealthier over the last 40 years — married men. The reason is that wives’ earnings now make a much larger contribution to household income than in the past.  However married men do not work less now on average than they did in the 1970s.  This is intriguing because it suggests there is something important missing in economic explanations of  the rise in labor supply of married women over the same period.

One possibility is that what we are seeing here are the aggregate effects of bargaining between spouses. This is plausible because there was a substantial narrowing of the male-female wage gap over the period. The ratio of women’s to men’s average wages; starting from about 0.57 in the 1964-1974 period, rose rapidly to 0.78 in the early 1990s.  Even if we smooth out the fluctuations, the graph shows an average ratio of 0.75 in the 1990s, compared to 0.57 in the early 1970s.

The closing of the male-female wage gap suggests a relative improvement in the economic status of non-married women compared to non-married men. According to bargaining models of the household, we should expect to see a better deal for wives—control over a larger share of household resources – because they don’t need marriage as much as they used to. We should see that the share of household wealth spent on the wife increases relative to that spent on the husband.

Bargaining models of household behavior are rare in macroeconomics. Instead, the standard assumption is that households behave as if they were maximizing a fixed utility function. Known as the “unitary” model of the household, a basic implication is that when a good A becomes more expensive relative to another good B, the ratio of A to B that the household consumes should decline.  When women’s wages rose relative to men’s, that increased the cost of wives’ leisure relative to that of husbands. The ratio of husbands’ leisure time to that of wives should therefore have increased.

In the bargaining model there is an additional potential effect on leisure: as the share of wealth the household spends on the wife increases, it should spend more on the wife’s leisure. Therefore the ratio of husband’s to wife’s leisure could increase or decrease, depending on the responsiveness of the bargaining solution to changes in the relative status of the spouses as singles.

To measure the change in relative leisure requires data on unpaid work, such as time spent on grocery shopping and chores around the house.  The American Time-Use Survey is an important source for 2003 and later, and there also exist precursor surveys that can be used  for some earlier years. The main limitation of these surveys is that they sample individuals, not couples, so one cannot measure the leisure ratio of individual households.  Instead measurement consists of the average leisure of wives compared to that of husbands. The paper also shows the results of controlling for age and education. Overall, the message is clear; the relative leisure of married couples was essentially the same in 2003 as in 1975, about 1.05.

One can explain the stability of the leisure ratio through bargaining; the wife gets a higher share of the marriage’s resources when her wage increases, and this offsets the rise in the price of her leisure.  This raises a set of essentially  quantitative questions: Suppose that marital bargaining really did determine labor supply how big are the mistakes one would make in predicting labor supply by using a model without bargaining?  To provide answers, I design a mathematical  model of marriage and bargaining to resemble as closely as possible the ‘representative agent’ of canonical macro models.  I use the model to measure the impact on labor supply of  the closing of the gender wage gap, as well as other shocks, such as improvements to home -production technology.

People in the model use their share of household’s resources to buy themselves leisure and private consumption.  They also allocate time to unpaid labor at home to produce a public consumption good that both spouses can enjoy together.  We can therefore calibrate the  model to exactly match the average time-allocation patterns observed in American time-use data. The calibrated model can then be used to compare the effects of the economic shocks in the bargaining and unitary models.

The results show that the rising of women’s wages can generate simultaneously the observed increase in married women’s paid work and the relative stability of that of the husbands. Bargaining is critical however; the unitary model, if calibrated to match the 1970s generates far too much of an increase in the wife’s paid labor, and far too large a decline in that of the men; in both cases, the prediction error is on the order of 2-3 weekly hours, about 10% of per-capita labor supply. In terms of aggregate labor, the error is much smaller because these sex-specific errors largely offset each other.

The bottom line therefore is that if, as is often the case, the research question does not require us to distinguish between the labor of different household or spouse types, then it may be reasonable to ignore bargaining between spouses.  However if we need to understand the allocation of time across men and women, then models with bargaining have a lot to contribute.

John Knowles is a professor of economics at the University of Southampton. He was born in the UK and schooled in Canada, Spain and the Bahamas. After completing his PhD at the University of Rochester (NY, USA) in 1998, he taught at the University of Pennsylvania, and returned to the UK in 2008. His current research focuses on using mathematical models to analyze trends in marriage and unmarried birth rates in the US and Europe. He is the author of the paper ‘Why are Married Men Working So Much? An Aggregate Analysis of Intra-Household Bargaining and Labour Supply’, published in The Review of Economics Studies.

The Review of Economic Studies aims to encourage research in theoretical and applied economics, especially by young economists. It is widely recognised as one of the core top-five economics journals, with a reputation for publishing path-breaking papers, and is essential reading for economists.

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Image credit: Illustration by Mike Irtl. Do not reproduce without permission.

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By Elvin Lim

Tea Party Republicans are about to be force-fed a slice of humble pie. In the first test of their political acumen since sweeping into Congress last year, they showed an ignorance of the first rule of democratic politics: never say never, because a politician’s got to be a politician.

Especially on an issue, the federal debt ceiling, with stakes as high as financial Armageddon itself! All the best intentions in the world, served up on the high horse of ideological purity, are about to bring the entire Republican party to its knees before Obama on this issue.

Ronald Reagan presided over 16 debt ceiling raises, Bush saw it raised 7 times. Did Tea Party Republicans really think that they could out-Republican Reagan and Bush? There’s the crux of any bargaining game — know thine chips. There is simply no way Wall Street and the Chambers of Commerce around the nation were going to sit around and let the Tea Party faction within the Republican fold play with this financial matter of life and death. Maybe it was the residue of last year’s electoral hubris, or maybe they believed the myth that fiscal conservatism is the one thing that unites Republicans, or maybe they forgot that the president wields a veto, but Tea Partiers and their leaders in Congress should never have done a repeat of George H. W. Bush’s “Read my lips, no new taxes.” Doing this backed them into a corner, flanked by no debt ceiling increases on the one side, and no tax increases on the other. Leaving no standing room left for compromises, the Tea Party caucus is about to realize that two negatives do not together make a “yes” from the White House. In fact, the only one who gets to say “no” with no less than constitutional gravity is the President.

Obama knew this issue was his to win all along, and he has played the Republicans like a fiddle, presenting himself as a grand negotiator and eminent pragmatist; the go-getter who slyly had it implied that checks for social security may not be sent out in August, and the media played along and covered the circus. But Obama knew that he never ever had to compromise, which is why he raised the goal of achieving a $4 trillion plan to ensure both that he looked presidentially ambitious, and that he would get exactly what he wants when the deal inevitably fails. Republican leaders trotted along to the White House negotiation table, willingly playing his game in part because they had to look like they were trying, but for the most part they were clueless about the plastic value of their bargaining chips.

It is one thing to take an extreme position, but it is another to take an extreme position on a matter that could precipitate financial Armageddon. I have to believe that anyone who is willing to take that risk has a part of herself who would like to see financial collapse on Wall Street, the decimation of corporate capitalism, and a return to Jacksonian laissez faire. The President is rather smugly playing this game because he knows that he doesn’t have to lift a hand because in the end, Wall Street will rein the Tea Party in. And so mainstream Republicans have allowed themselves to lose control of the message — which worked so very well in their favor when they were still focused on jobs — by talking themselves into corner on an issue they wrongly thought was more on their side than on the President’s. Wall Street is not conservative or Republican, Tea Partiers! It’s even more powerful than the liberals, and that’s why the Dow’s not even flinching.

Worse still,

Elvin Lim is Assistant Professor of Government at Wesleyan University and author of The Anti-intellectual Presidency, which draws on interviews with more than 40 presidential speechwriters to investigate this relentless qualitative decline, over the course of 200 years, in our presidents’ ability to communicate with the public. He also blogs at www.elvinlim.com. In the article below he looks at President Obama’s attempts to pass health care reform. See his previous OUPblogs here.

President Obama is finally attempting to take charge of the health-care reform debate with an address to a joint session of Congress on Wednesday.

It comes down to this. If he does not pass a health-care bill – whatever its provisions may look like – he will indeed face his political Waterloo, because health-care reform has become the defining issue of his 2008 campaign on which the president has staked all his remaining electoral mandate. That this is open knowledge to every member of congress does not bode well for the president, because just about the worst bargaining position one can have is the one in which everyone knows that the bargainer not only cannot have what he wants, but must make compromises to get even some of what he wants. Because everyone knows this, everyone to the left and right of Obama will make their demands, and his only hope of coming out unscathed is if one or the other side is willing to shift their bottom line (on what Democrats call the “public option” and what Republicans call “government-run insurance”.

The bargaining game ahead of the president is enormously complex, but there are few ground rules that he could follow to maximize his returns. First, he must absolutely decide in his mind if he wants a bipartisan bill or not, and there are many Democrats who don’t. I will assume that he must at least present the public facade of wanting a bipartisan bill.

Second, he must pull all sides away from the fault-line of the debate - whether or not to have a “public option” - because health-care reform is rather more than just about “government-run insurance.” The
president must find a way for us to see the bigger picture, if only so that we do not continue our microscopic attention to our differences.

Third, Obama needs to create face-saving conditions and incentives for one or more dissident factions in the health-care debate to capitulate. It seems to me his best bet is to try to change the minds of members of his own party, in part because the president seems doggedly committed to at least a semblance of bipartisanship. An electoral mandate (or whatever that is left of it) is nothing without the coat-tails effect of the president, and on this the president can try to call in a few favors in return for future ones. As I think it has become very clear during the August congressional recess, capitulation from the Republicans seems all but unlikely now. If anything, Republican members of congress have become emboldened by the president’s falling approval ratings.

Senator Olympia Snowe’s idea that a public option would only be “triggered” if certain conditions are set is one such face-saving possibility for the president to try to woo the more liberal members of his party. In privileging the status quo, the conditional triggering option concedes that median congressional position on the debate has shifted to the right of where the president initially stood. But by specifying what the triggering conditions are, liberal democratic members of congress can tell their constituents (like the AFL-CIO) that they are still achieving their initial goals but with different means. If the president can just shift the debate to what these “triggering” conditions should be - and the devil will be in the details - he would have earned a significant victory. Such a compromise will not unite the country, but it could make us less divided, ironically, because no one is getting what they want.

It is too late now for the president to tell us what he wants on Wednesday, not only because he won’t get it, but also because he has allowed the debate to fester and the battle lines are now drawn. His
job on Wednesday is to muddy the battle lines again. As he is already starting to do, Obama should try to convince all negotiating parties that there should be no bottom lines, no veto points, no categorical
demands. The erstwhile professor of constitutional law will have the unenviable task of bringing together what the constitution pulls asunder. Not the Great Communicator, but the Great Umpire he must be.

This wonderful book was recently endorsed by the Rutgers University Project on Economics and Children. This seems particularly relevant in today's economic hardships, addressing what kids may do for themselves: