Category: Economics

This Monday the friends, colleagues, family, students, and disciples of Thomas C. Schelling gathered at the Kennedy School to honor his memory. The speakers included his eldest son (Andrew Schelling), the current dean of the school (Doug Elmendorf) two former deans (Graham Allison and David Ellwood), and an academic all-star cast including Mort Halperin, Richard Zeckhauser, and Glenn Loury. Somehow I was also asked to speak.

I didn’t speak from a text, but what follows is a version of what I said, “revised and extended,” just like the Congressional Record.

*****

SCHELLING’S MONUMENT

The dome of St. Paul’s cathedral marks the center of the City of London – a cathedral, and a city, both rebuilt after the Great Fire thanks largely to the energy and genius of Christopher Wren. On the floor directly below the dome appears Wren’s obituary, which concludes: “Si monumentum requiris, circumspice” – “If you’re looking for his monument, look around you.”

Here in the Forum of the Kennedy School, one can say the same thing of Thomas C. Schelling: his monument is all around you. Not the buildings, but the school itself as an institution, the idea it embodies, and all of us and all the others who came together around that idea are Schelling’s monument. The city of Cambridge, among many other cities, also forms part of that monument, since without Schelling’s wisdom about how to avoid nuclear war it might well be a heap of rubble glowing in the dark.

As to the more local monument: Schelling did not re-form the Littauer School of Public Administration into the Kennedy School of Government all by himself. A whole catalogue of giants in that founding generation – Richard Neustadt, Francis Bator, Howard Raiffa, Fred Mosteller, Phil Heymann, and Edith Stokey – helped to start the work. The second and third generations, home-grown or recruited, who carried on the project here and elsewhere, included – in addition to those who have spoken here today – Mark Moore, Mike Spence, Mike O’Hare, Al Carnesale, Ronnie Heifetz, Bob Leone, Michael Nacht, Bill Hogan, Bill Clark, Dutch Leonard, and Ash Carter.

But though Schelling did not act alone, the power of his mind and the force of his personality were indispensable in convoking this community.  To cite my own example among many: as a college senior, I was interrupted on my way to law school by reading “On the Ecology of Micromotives,” which introduced the “tipping” idea with its famous checkerboard model of how residential segregation could emerge, almost inevitably, in a population where everyone prefers integration but no one wants to be part of a small local minority. I went to Holland Hunter, the chair of the Haverford economics department and my mentor, and said “I have to learn how to do that.” Ho chuckled and said, “Well, Schelling teaches at the Kennedy School.” I said, “The where?”  And I’ve never looked back.

Among the giants of his generation, Schelling was foremost in creating the idea of public policy analysis as a discipline of thought, distinct both from public administration and from the social sciences: a pragmatic discipline focused on the question “What course of action, in these circumstances, would best serve the public interest?”

Of course, Schelling wasn’t only a policy analyst: he was a social scientist of towering stature, the sort of person whose Nobel Prize led people to say not “Really?” but “About time!” Others today have mentioned his contribution to the understanding of strategic interaction, and the role his concepts of imperfect self-command and strategic self-management played in starting what became “behavioral economics.” But the Schelling idea that hit me hardest was the tipping model, and the more general principle of paying attention to the importance of positive feedbacks in the choice of problems to work on.

Reading Schelling on micromotives teaches you to avoid the Sisyphean problems – where, once you’ve pushed the stone up the hill, the power of negative feedback will roll that stone right back down over you on the way to its equilibrium – and to choose instead the exciting positive-feedback situations where a nudge might get the stone over the crest and moving of its own accord down to a much better place on the other slope, or the dangerous positive-feedback situations where a little effort in the right place and at the right moment might keep the stone from rolling irretrievably over the brink. All of my work on focused deterrence in law enforcement is the application of that bit of insight; the book that resulted forms part of Tom’s monument.

In the economics course Tom and Francis taught us as first-year MPP students, we learned many important things explicitly: for example, that an obviously pro-consumer ban on surcharges for using credit cards and an obviously anti-consumer ban on discounts for cash are, in fact and in truth, identical policies. That pointed to the general rule: Ignore the label on a policy, and ask instead about its results.

But Tom taught us even more vital things by his example:

• to use models without being used by them;
• to see the humor in serious situations, and look for the apparent paradox that might make sense of a situation and point toward a solution;
• to be prepared, and willing, to be surprised by the way the analysis comes out, or by the way the real-world situation stubbornly refuses to behave as the analysis says it ought to behave; and
• to embody clear thought in clear speech and clear writing.

Though he never would have put it in these terms, Tom taught us policy analysis not merely as a discipline in the academic sense but as a yoga, an intellectual and moral self-discipline requiring difficult feats of non-attachment: to self-interest, to group interest, to factional loyalty, to received opinion, to one’s own policy prejudices, and – most of all – to the need to have been right in one’s earlier views. No force in the world – not greed, not envy, not party spirit, not even cruelty – does as much damage as the inability to say, without too much discomfort, “I was completely wrong about that; good thing I’m smarter now.”

By his example, Tom also taught us to pursue questions not for their abstract interest but for their practical significance. He was disappointed when I chose to write my dissertation on cannabis policy – where I was convinced I could see the right answer – rather than on cocaine policy, where the stakes were much higher but the right set of policies seemed much harder to find.

That principle led him to choose smoking as the new focus of his attention once his insights about preventing nuclear war had largely been incorporated into the thinking of decision-makers. Tobacco wasn’t a “Schellingesque” problem, ready to fall apart at the touch of a brilliant insight. There is no analogy in tobacco policy to second-strike capacity or focal points or the threat that leaves something to chance. No, Tom chose tobacco simply because it was and is the leading preventable cause of death in the developed world, and a growing problem in the developing world, with tens of millions of lives at stake, and he was convinced that thinking hard about it would help point policy in the right direction.

The same was true of global warming. As Tom freely acknowledged, economic and strategic analysis were only two among the two dozen disciplines needed to address that question. He picked it up not because he saw the answer but because the problem was interesting and hard, and because the consequences of getting it wrong – either ruinously over-investing in fending off what might be a phantom threat, or under-investing and failing to control warming before it becomes self-sustaining, or combining the two errors by adopting expensive but ineffective control policies – might be so disastrous.

In both of those cases, he demonstrated his willingness to follow the analysis where it led, even if it led him away from his old allies. With respect to tobacco, he followed Nietzsche’s advice to “depart from one’s cause when it triumphs.” Having labored mightily to put the health harms of smoking front and center in policy discourse and to break the political power of the tobacco industry, and having helped demonstrate the futility of low-tar-and-nicotine cigarettes as harm-reduction measures, Tom later formed part of a distinct minority willing to speak out against what had become a rigid tobacco-control orthodoxy on behalf of the less dangerous non-combustion forms of nicotine administration, including “vaping.”

On global warming, he started out in the camp of the skeptics: not skeptical about the human contribution to climate change, but somewhat skeptical about what seemed alarmist views of how bad things might get and deeply skeptical both about the capacity of initiatives such as the Kyoto Protocol to control the problem and about the feasibility, constrained by international politics, of mounting the massive coordinated effort that might be required to keep greenhouse-gas levels below what some climate scientists regarded as intolerably dangerous levels.  He hoped that geoengineering approaches and measures to adapt to whatever climate change did occur might reduce the magnitude of the required economic adjustments.

But as the temperature data continued to come in, and as sailboats began to ply the Northwest Passage through waters once utterly ice-locked, Tom parted company with the “Copenhagen Consensus” group and started to call for more vigorous action, on the theory that changes in relative prices – especially if phased in – were likely to be easier adjust to than rising sea levels and shifting and rainfall patterns.

From the outside, it was hard to see the influence Tom Schelling wielded over those of us who followed him, without ever handing out orders. Once, in a conversation with Mark Moore about something Mark wanted me to do or not to do, contrary to my inclination – I can no longer remember the original topic, about which Mark was probably right – I defended my intentions by saying, “Mark, you don’t understand; I always wanted to be Tom Schelling when I grew up.” He replied, “What you don’t understand is that everyone in this building wants to grow up to be Tom Schelling.”

Well, Tom is no longer with us, and neither is that unforgettable smile. So it’s time for the rest of us to grow up and get back to building the monument.

Footnotes

Here’s an earlier tribute to Schelling, from the memorial service at the University of Maryland.

And here are some of his thoughts on climate change and what to do about it.

 

Schelling’s most famous book, and the one most likely to be read 500 years from now, is The Strategy of Conflict.  Micromotives and Macrobehavior is a  similarly stunning achievement, centering around “tipping” phenomena. The best introduction to Schelling’s thought for the non-specialist is probably the collection of essays called Choice and Consequence; the two essays on “self-command” reflect his role in founding behavioral economics.