The View from Right Field

The Problem with Models

In her Notebook column in Saturday’s Financial Times,¹ Gillian Tett notes that auto loans, including “subprime” auto loans, have risen sharply over the past year.  In addition, the number of delinquent car loans, especially in the subprime category, are rising, too.  In fact, a million more Americans are delinquent on their car loans now than in 2010.

In trying to come up with a reason for the increase, which has apparently left some observers baffled, Ms. Tett says:

“But there is yet another possible explanation: consumer behavior might be shifting and, in the process, upending economists’ projections about default, as subprime mortgages did a decade ago.”

Ms. Tett notes that economists missed the subprime mortgage collapse because, inter alia, their models assumed consumers would default on the loans in a particular way: first, credit cards; second, auto loans; and last, mortgages.  But that wasn’t what happened.  People defaulted on the mortgages first.  Ms. Tett suggests this was because it was more acceptable to default on a mortgage but people needed their credit cards to live.  I would say it slightly differently: People started defaulting on their mortgages first because they realized that, in many states, it took a long time for people to get evicted from their house, while the effects of defaulting on their credit card or auto loan were more immediate.

GM Dumps GMOs – In Some Cheerios

General Mills will soon be selling some Cheerios made without ingredients containing “genetically modified organisms,” a/k/a “GMOs”.  This from yesterday’s Wall Street Journal:

“Critics of GMO use in foods called attention to the Cheerios move Thursday, hailing it as a major victory.  Advocacy groups have raised concerns about possible health problems from eating foods with GMOs, which are crops like corn grown from seeds genetically engineered for desirable traits like pest resistance.  The groups have promoted consumer campaigns in some states to mandate labeling of GMOs in food, and targeted specific brands – including Cheerios – and to change their policies.

Most big food companies have rebuffed such efforts, arguing that there is no evidence of any health problems resulting from GMOs despite decades of use.  The food companies also generally have refused voluntarily labeling, saying it is costly and will give consumers a misconception that GMOs are harmful.

‘There is broad consensus that food containing GMOs is safe, but we decided to move forward with this in response to consumer demand,’ said Mike Siemienas, spokesman for General Mills. …

GMO Inside, a campaign that advocates GMO labeling, said Cheerios is the first major brand of packaged food in the U.S. to make the switch from containing GMOs to marketing itself as non-GMO.  Some foreign countries have restricted GMO use in food for years.”

I have no objection to General Mills doing whatever it wants with the products it sells.  Cheerios is GM’s product; it can make Cheerios however it wants to.  My concern is not with General Mills.  The main problem isn’t even what happens in the United States.  If people in the United States want food made without genetically modified ingredients, it would be a problem.  Most of our food presently comes from genetically modified seeds, etc., so there would be a difficult transition period as we stopped using GMOs.  But we could do it.  Our farmers could grow all the food we need without using GMOs.  Our food would be more expensive, but we could afford it.  And we would have enough.

The problem with the campaign against GMOs is not in the rich countries; it’s in the not-so-rich countries.  There are many countries where people do not have enough food, where drought and pests can cause major dislocations in the food supply from year to year.  Drought-resistant and pest-resistant crops can provide more food and more secure food supplies in those countries.

Fifty years ago, the green revolution of Norman Borlaug and others brought relief from hunger and famine to millions of people in poorer countries.  GMO foods have the potential to do the same thing today.

Protesting against foods grown from genetically modified seeds and other GMOs makes people in the United States feel good about their social conscience.  In less advantaged countries, those protests will, if successful, result in more hunger and more disease made worse by malnutrition.

Separated at Birth? Ted Cruz and Tom Ricketts

A scary thought, but here are the pictures:

Genetically Modified Seeds: Good or Bad?

French researchers have published a study saying that a certain type of genetically-modified corn causes cancer.  Let me quote from the Chicago Tribune:

“For more than a decade, American farmers have planted corn seed containing modified genes that resist crop disease, combat insect pests and make weedkiller more effective.

Generations of livestock have been raised on genetically modified corn.  Millions of Americans have consumed it too ….

If genetically modified corn posed an urgent health threat, America would know it by now.  In fact, the science behind these crops not only is safe, but transformative. Agricultural biotechnology has reduced the amount of chemical pesticides and herbicides in use.  It has improved yields. It is making important contributions to the relief of global hunger ….

So imagine our surprise at the new study from the University of Caen in France claiming that genetically modified corn causes cancer. … [I]t has prompted European authorities to consider banning a certain type of bioengineered corn made by St. Louis-based Monsanto Co.

The study alleged that rats consuming Monsanto corn over a two-year period developed more tumors and other health problems than a control group of rodents fed with conventional corn.  The rats also developed cancer when they consumed water spiked with the common herbicide Roundup, which the corn is modified to resist.

Roundup-Ready corn, as it's called, has been a boon.  It has enabled farmers to spray weedkiller directly on their fields much more efficiently.  If the substance gets on the crop, thanks to the biotech protection, no damage is done.  Only the weeds die. …

The study followed the lives of 200 lab rats, and that is problem No. 1.  The sample size is too small to be useful in determining food safety.  By testing both the corn and the Roundup, the researchers diluted what would have been a small-scale effort even further.  In addition, the research team selected a strain of rat said to be especially susceptible to tumors. …

The study was greeted with skepticism from scientists around the world for other reasons too. …

The scientific community's doubts were absent from initial accounts of the study, for a particular reason.  According to published reports, journalists were given advance copies of the findings only if they agreed to keep the information confidential.  So their accounts at first were published without independent input. …

No one familiar with Europe's customary aversion to this technology can be shocked at what looks to us like a misuse of science in the service of a political agenda.

… It is sad to consider that the rats in this flawed study ate better than many of the people in the world who could benefit from the crop technology that it attempts to smear.”

The most logical conclusion from this study is, of course, that a person who is especially susceptible to developing tumors should not eat as much corn, compared to their body weight, as these rats did, especially while drinking water laced with pesticides.  That shouldn’t be too hard for most of us to do.

But the main point here is that a certain group of people, living in the developed world, where food is plentiful and relatively inexpensive, have developed an aversion to things like genetic modification of foods and seeds that might help make food less scarce and less expensive in less developed countries (or whatever the proper “pc” term is for such countries today).  In fact, the developed world’s elites have even convinced the governing elites in some less developed countries (who personally have enough food at an acceptable price, even if their people don’t) to limit the use of genetically modified seeds in their countries.*

Actually, the elites’ aversion to genetically modified seeds fits with their attitudes in other areas.  They have their homes in Vail or condos in San Francisco, so now they worry about over-development and propose zoning controls and density limits to keep others out.  While they talk about maintaining the wilderness for all to enjoy, what they really want is to keep others out so it is not crowded for them.

It all brings to mind, in an ironic way, a movie I saw a couple of years ago, “Unknown.”  (I particularly enjoyed the movie because it had so many scenes of Berlin in it.)  The plot of the movie involves an evil organization that is trying to stop a scientist and his Saudi benefactors from disclosing to the world a new genetically-modified strain of corn that can grow in any climate.  The scientist and the Saudi prince want to give the formula to all, for free, to combat world hunger.  The implication is that a group of big agri-business corporations are trying to kill the scientist and steal the formula to protect their profits.

This is, of course, how Hollywood sees the world.  Big business = bad. But in reality, it would be the PC green elitists who would most want to stop the genetically-modified strain of corn from being distributed around the world.  They are doing it today with respect to GM crops when it is corporations who want to sell them.  They would oppose it just as much if the seeds were being given away for free.

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* One wonders what these people would be saying about Norman Borlaug’s “green revolution” if he were doing it today.

Climate Change and the Unintended Consequences of Being Green

Those worried about climate change (f/k/a global warming) want the world, i.e., the governments of the world, to spend hundreds of billions, maybe even trillions, of dollars to solve the problem. Which raises the question of what they propose to do and how effective it will be – and what the unintended consequences might be.

Earlier this week the Chicago Tribune reported that "[t]owns across Illinois and nationwide have switched to LED traffic signals because they burn brighter, last longer and save money by using 90 percent less energy than older incandescent bulbs."

Which sounds great – except. Except that "they also emit less heat, [which means] they sometimes have trouble melting snow. This has caused problems across the Midwest. In Wisconsin earlier this month, snow blanketed LED traffic lights in some towns, leading to ‘crashes at intersections where drivers aren’t sure whether to stop or go,’ The Associated Press said."

But don’t worry, if there is a problem in Kendall County, they will send a crew out to brush the snow off, though, obviously, it may take a while. In any case, according to an engineer in the Lake County Division of Transportation: "‘Maybe it takes longer to melt and you have to go and clean them off, but it’s part of the trade-off for years of energy savings.’"

But when you are talking about trade-offs, consider that an Oswego, Illinois, detective said a snow-covered, obscured LED signal was "‘a contributing factor’" in the crash that killed a woman last April. The driver coming the opposite way couldn’t see the signal, and he crashed into the woman’s car. It was, according to the article in the Tribune, "an unintended consequence".

Nasty things those unintended consequences.

The Models of Climate Change

The cover of the December 5 issue of The Economist read "Stopping climate change". Which of course can’t happen. The climate will change, and there is nothing mankind can do about it – or that we ought to do about it. Climate changes all the time for reasons that we only sort of understand. Trying to interfere with normal changes in our climate could cause problems greater than anything we can imagine from global warming.

But of course, that is not what The Economist was talking about, nor is it what the world leaders who are meeting in Copenhagen mean, either. What they are worried about is climate change caused by man, especially climate change caused by putting more and more carbon dioxide into the air. (Note: "Climate change" is the new name for what used to be called "global warming". Global warming worked as name until, in the last few years, average temperatures stopped going up.)

For years we have been told that all of the carbon dioxide that is going into the air is causing temperatures to rise, and that we are reaching a point where we need to do something or the earth will be in big trouble. The collapse of the real estate bubble put a lot of people under water financially. Climate change, we are told, will put a lot of people under water literally.

But several weeks ago there was a big brouhaha over a large number of either stolen or leaked e-mails from the Climate Research Unit at the University of East Anglia in England. (Actually, there was a big brouhaha on some parts of the Internet; it was not that big in most of the mainstream media.) Some people felt that the stolen/leaked e-mails showed scientists at East Anglia threatening to prevent people who disagreed with them from publishing, talking about using statistical "tricks" to "hide the decline" in temperatures that did not fit their theories, etc.

Those who believe in climate change jumped to East Anglia’s defense: The problem is still real. The solution is still the same. The stolen e-mails were quoted out of context. Other databases give you the same information.

There is a logic to the idea that putting more CO2 into the atmosphere will cause things to warm up. As I understand things, that is what basic science tells us. And if the increase in CO2 was the only thing that affected the climate, if it was the only variable, the answer would be clear. But CO2 is not the only thing. There are lots of things that affect climate. To figure out what a big increase in CO2 is going to do to temperatures in the future, you have to know a lot of things. You have to know all of the other things that affect temperatures, too. You have to know how they are going to change in the future, also. As CO2 levels go up, what happens to these other things? Are they pushing temperatures up, too? If so, are they pushing temperatures up because CO2 levels are going up or are they going up independently, for some other reason? Or, alternatively, as CO2 levels go up, are these other things pushing temperatures in the opposite direction? And if so, are they pushing temperatures down independently of CO2 levels or are they pushing temperatures down in a reaction to CO2 levels pushing temperatures up?

In order to figure out what is going to happen in the future, you have to come up with a model (which is whole bunch of formulas all tied together). This model will tell you, for example, what will happen to global temperatures if CO2 levels go up by X or what will happen if they go up by 2X. It is the models that are the key to all of the predictions that are made about climate change.

Which raises a big question. Because while we can all understand the simple scientific explanation of why an increase in CO2 in the atmosphere would cause temperatures to go up if CO2 was the only variable, I do not know how many experts really understand all of the intricacies of the models and formulas that are used to predict the consequences of increased levels of CO2 in the atmosphere.

The stolen/leaked e-mails from East Anglia may be more interesting, but what would be more useful would be an analysis of the models and formulas used by the scientists of East Anglia. Think about models in other areas. According to the Obama administration, their economic model told them that, if Congress did not pass the stimulus last February/March, unemployment would go to 9%, but if the stimulus was passed, unemployment would peak at only 8%. Oops. Something went wrong there.

Similarly, AIG had fancy financial models that told them how to calculate risk and protect themselves in all kinds of market situations. Banks had a model developed back in the 1990s called the "value at risk" or VaR model which told them how risky their portfolios were.* Oops again. Warren Buffet may have said it best, at least with respect to financial models, when he said, "Beware of geeks bearing formulas."

This is my concern with the arguments about climate change. It’s not just the proponents we are supposed to believe. It’s their models and formulas that we have to trust, and we have no way to test them. We have no way to know if the models are really considering everything or whether the formulas are set up properly so that everything works together even approximately right.

But the risk is too high, we are told. We can’t take a chance. We have to act. No, that is not the proper conclusion. The proper conclusion is that we can’t take a chance on spending all this money on something that could be a waste, especially when there are real things we can do today that would make people’s lives better now.

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* See L. Gordon Crovitz, "The 1% Panic," The Wall Street Journal, October 13, 2008, and "Behind AIG’s Fall, Risk Models Failed to Pass Real-World Test," The Wall Street Journal, November 3, 2008.

Facts Are a Transient Thing – # 4

In last Tuesday’s New York Times, Natalie Angier reported on some recent medical discoveries regarding the spleen:

"Scientists have discovered that the spleen, long consigned to the B-list of abdominal organs and known as much for its metaphoric as its physiological value, plays a more important role in the body’s defense system than anyone suspected.

Reporting in the current issue of the journal Science, researchers from Massachusetts General Hospital and Harvard Medical School describe studies showing that the spleen is a reservoir for huge numbers of immune cells called monocytes, and that in the event of a serious trauma to the body like a heart attack, gashing wound or microbial invasion, the spleen will disgorge those monocyte multitudes into the bloodstream to tackle the crisis. …

That researchers are only now discovering a major feature of a rather large organ they have been studying for at least 2,000 years demonstrates yet again that there is nothing so foreign as the place we call home.

‘Often, if you come across something in the body that seems like a big deal, you think, "Why didn’t anybody check this before?"’ Dr. Nahrendorf said. ‘But the more you learn, the more you realize that we’re just scratching on the surface of life. We don’t know the whole story about anything.’"

This is yet another example of how little we know – in spite of how much more we know today than we knew just a few years ago.

I would suggest that we should remember stories like this one when some group of experts tells us that the answer to a question is settled without a doubt or some group of politicians claims that they, and nobody else, know the only solution for some crisis.

Facts Are a Transient Thing – #3

The New York Times reports another example of the title of this post. Twenty years ago everybody knew that

"the young Earth was a hot, dry, desolate landscape interspersed with seas of magma and inhospitable for life. Even if some organism had somehow popped into existence, the old story went, surely it would soon have been extinguished in the firestorm of one of the giant meteorites that slammed into the Earth when the young solar system was still crowded with debris."

When Norman Sleep, a professor at Stanford, wrote an article in 1986 calculating the odds that life could have survived the impact of one those giant meteorites, it was rejected for publication because it was impossible. Nothing could have lived on the earth then.

Now, however, what was thought to be absolutely true just two decades ago has been shown to be wrong by new research and new discoveries. Instead, scientists now believe that

"by 4.2 billion years ago, the Earth was a pretty placid place, with both land and oceans. Instead of hellishly hot, it may have frozen over. Because the young Sun put out 30 percent less energy than it does today, temperatures on Earth might have been cold enough for parts of the surface to have been covered by expanses of ice."

Once again, we need to remember that some of what passes as today’s scientific truth will be tomorrow’s discarded theories.

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Note: Thanks to James Taranto of "Best of the Web Today" for a pointer to this story.

You Can't Fool Mother Nature and You Can't Beat the Big Muddy

There was an interesting point in last Friday’s Chicago Tribune about the flooding and water levels along the Mississippi River:

"After days of flooding, the Mississippi showed significant signs of losing steam Thursday. That's because in recent days the river hit record levels as it fanned out for miles around when it overran levees.

For urban areas in and around Quincy, the breached levees [upstream] were a blessing. Most of the land submerged along the river is farmland."

In other words, the fact some levees upstream broke, and some of the water was able to spread out over, i.e., flood, land around the river banks, means that the river will not be as high or as dangerous when it gets downstream.

Which means that the levees everybody builds to keep the water from flooding, raise the water levels, which mean the levees have to be built higher which pushes the water levels higher which mean the levees have to be higher and so on and so on.

I think there may be a lesson here.

Media Reports on Climate Change Skepticism – Sort Of

Yesterday’s Chicago Tribune had an article* on page 8 entitled "Summit warms the hearts of climate change skeptics". The only trouble with the article was that it told us very little about the substantive positions of the global warming skeptics. It wasn’t until the eighth paragraph that we were told what scientists at the conference were saying – which was after the pro-global warming side was discussed in the third and seventh paragraphs of the article, as well as in a little box next to the top of the article entitled "The case for global warming."

The article did ultimately tell us a little more about what happened at the conference – in the last three paragraphs of the article – and after more time was spent letting the global warming side say why they were right and the skeptics were off base.

If you are interested in a little bit of real substance about what happened at the conference, see this article in the London Sunday Telegraph or go to the Heartland Institute website.

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* I apologize for not linking to the article itself, but I could not find it on the Tribune website.  It was in the print edition, though.