WHAT BASEBALL, POKER AND THE STOCK MARKET CAN TEACH US ABOUT CLIMATE CHANGE

Sam Smith

One thing is clear as the climate change debate chugs along: we need to teach math better in our schools. And it wouldn't hurt if journalism schools taught some math as well.

For example, it is apparent that those who argue that one good snow storm destroys the case for climate change never got a good introduction to odds and averages.

An exception seems to be baseball. I have never heard a critic of ecological theory argue that a good hitter's failure to get to base in a particular game indicates that he should be immediately traded. Sometimes it's because he swings badly and sometimes because the pitch is low and outside, but nobody says that's proof he's a bad hitter.

Yet, have one cold winter and they want to dump climate change.

I'm mystified by this. How can a culture that understand formulas like

have such a hard time with temperature variations?

My only explanation is that sports writers have done a far better job getting people to understand (or just accept) things like odds and averages than scientists or journalists. The unfortunate thing is that too many seem to think they only apply to sports.

Maybe we should forget about Copenhagen and have a Monday Night Climate Countdown.

There are some other people good at figuring out odds and averages, such as poker players.

Over a decade ago, I offered a poker player's guide to environmental risk assessment. Key points included:

1. Figure the stakes as well as the odds.

2. The odds of something happening at any moment are not the same as the odds of something ever happening. In ecological calculations - especially ones in which the downside could ruin your whole millennium - it is the latter odds that are important.

3. When confronted with conflicting odds, ask what happens if each projection is wrong. Temporary job loss because of environmental restrictions may come and go, but the loss of the ozone layer is something you can have forever.

4. When confronted with conflicting odds, remember that you don't have to play the game. There are other things to do with your time - or with the economy or with the environment - that may produce better results. Thus, instead of playing poker you could be making love. Or instead of getting jobs from some air or water degrading activity, the same jobs could come from more benign industry such as retrofitting a whole city for solar energy.

5. Don't let anyone - in industry, government, or the media - define an "acceptable level of risk" for your own death or disease. They may not have the same vested interest in the right answer as you do.

6. If the stakes are too high, the game is not worth it. If you can't stand the pain, don't attempt the gain.

Lately I've been wondering how a successful stock market investor might figure out whether global warming was a good investment.

Most stock market charts look much like climate records kept by NASA - an awful lot of detail in a small space that is hard for the impatient or untrained to figure out.

But there is one kind of chart that addresses the key issue: which way a stock really headed. It's called a point and figure chart. It consists of columns of Xs and Os - the former indicating a rising stock, the latter a falling one.

The neat trick is that you only change directions if the stock moves a certain amount - typically three points. What this does is to eliminate minor fluctuations and emphasizes the important stuff.

For example, let's say you bought a stock for 20 and it went up to 22. You would do nothing, but when it hit 23 you would show three Xs in a column.

Now let's say the stock goes down to 21 and then back to 23. You would do nothing because it hasn't moved three points. But let's say it goes down to 18. Then you would show five Os.

A normal chart of such things shows change in neatly divided time frames. Point & figure charts don't care much about time - mostly about movement.

I tried this approach on global temperatures since 1880 as reported by NASA. Using as the basis the average temperature for 1951-1980, here's what resulted:

Note the consistency in the patterns until 1981. Then suddenly there is a breakout combined with rising peaks. This is known as an ascending triple top breakout - and in the stock market it's a really good thing. The stock continues to rise and fall but the peaks keep getting higher. If this is a stock you may well want to buy it, but if it's climate change you don't want it at all.

Note also that the temperature has bounced up and down 3-6 points about a dozen times since 1880 just like the stock market. And just like the rest of life, come to think of it.

Of course, to those who think climate change is a purely ideological or theological issue, none of this means much.

Still, if someone tells you that the snow outside proves there's no global warming, remind them that in 2009 Albert Pujols only got a hit 33% of the time.

Labels: BASEBALL, CLIMATE CHANGE, ECOLOGY
12/06/2009 | Comments