Levitt and Dubner on the northern spotted owl

By Felix Salmon
October 18, 2009
all the controversy over the war against environmental science being waged by Superfreakonomics, I'll add only that this comes as no surprise to me, since something similar (albeit on a much smaller scaled) can be found in the first book. I actually did some reporting on this when Freakonomics first came out, but since it was buried in a 4,400-word review on a little-read personal website, it's hardly surprising that nobody saw it. So I'll resuscitate it here:

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In light of all the controversy over the war against environmental science being waged by Superfreakonomics, I’ll add only that this comes as no surprise to me, since something similar (albeit on a much smaller scale) can be found in the first book. I actually did some reporting on this when Freakonomics first came out, but since it was buried in a 4,400-word review on a little-read personal website, it’s hardly surprising that nobody saw it. So I’ll resuscitate it here. The upshot is that the Freakonomists have a history of misrepresenting environmental science:

Levitt and Dubner like to get holier-than-thou when others make mistakes. At one point, they eviscerate a homeless advocate named Mitch Snyder, for saying that there were 3 million homeless Americans:

When Snyder was pressed on his figure of 3 million homeless, he admitted that it was a fabrication… It may be sad but not surprising to learn that experts like Snyder can be self-interested to the point of deceit. But they cannot deceive on their own. Journalists need experts as much badly as experts need journalists… Working together, journalists and experts are the architects of much conventional wisdom.

So what happens when Dubner and Levitt – a classic pairing of a journalist and an expert – get together? It may be sad but not surprising to learn that even they can come up with decidedly dodgy numbers. Here’s one:

Economists have a curious habit of affixing numbers to complicated transactions. Consider the effort to save the northern spotted owl from extinction. One economic study found that in order to protect roughly five thousand owls, the opportunity costs – that is, the income surrendered by the logging industry and others – would be $46 billion, or just over $9 million per owl.

When alarmist figures in the billions start getting quoted, I immediately start getting suspicious. So I went to the footnotes, which cited a paper by Jason Shogren from which, I believe, this is extracted. Here’s what Shogren actually writes:

Opportunity costs have been estimated for a few high-profile, regional ESA conflicts such as the northern spotted owl. One study estimated that an owl recovery plan that increased the survival odds to 91 percent for a population of about 1,600 to 2,400 owl pairs would decrease economic welfare by $33 billion (1990 dollars), with a disproportionate share of the losses borne by the regional producers of intermediate wood products, a relatively small segment of the population (Montgomery et al. 1994). If the recovery plan tried to push a goal of 95 percent survival odds, costs increased to $46 billion. Another study estimated the short-run and long-run opportunity costs to Washington and Oregon of owl protection at $1.2 billion and $450 million (Rubin et al. 1991).

In other words, Levitt and Dubner have taken the very highest estimate from Shogren’s paper, one which Shogren didn’t even come up with himself, and used it uncritically. They could have used the $1.2 billion and $450 million estimates instead, of course, but chose not to for reasons we can only guess at.

I also sent Shogren an email, asking him what he thought of this use of his number. He said that the $46 billion was “an outside estimate,” and added:

We used the number to illustrate what little we do know about costs of the Endangered Species Act. Other numbers we cite in the paper say that the ESA is more about transfers of wealth (from agricultural to recreation) than about the loss of wealth.

The really weird thing is that the factoid aboout the spotted owl seems to have been dropped into the book utterly randomly: it’s there only to illustrate the broader point that economists try to measure all manner of different things. But why would Levitt and Dubner concentrate only on the costs of saving the spotted owl, while ignoring the benefits? And why would they pick a number which seems designed to shock, rather than a much more reliable number which is less shocking, like the cost per life saved of installing various safety features on roads or subways? The broader context, after all, is that of abortion, and whether it’s possible to quantify the costs and benefits of abortion, after taking into account its role in lowering the crime rate. Saved lives, in this context, seem far more germane than saved owls.

Update: John Berry writes in with more:

Back in the ’90s I spent a week reporting on the economics of the spotted owl court injunction that had halted timber sales in the northwest. My best source was a guy named Stub Stewart, who had just retired as CEO of a privately owned lumber company based in Eugene, Ore. He introduced me to a former plywood mill manager who had become a consultant after his plant shut down. The consultant had a data base that covered the whole forest products industry in the region. Their joint conclusion was that the owl hadn’t cost a single job.

The key was that the industry had pretty well exhausted its resource base. First, the privately owned timber was cut and as that source of stumpage dwindled, the Forest Service and the BLM gradually increased the allowable cut on public lands. But that too was finite and timber sales began to fall. Meanwhile, productivity grew rapidly in the industry. Stewart flew us in his helicopter out to a sale site in the Oregon Cascades his company was cutting. The entire operation was being performed by a contractor with a crew of only three using about $1.5 million worth of equipment, including a small crane. Productivity was also going up in newer plywood mills. All of the job loss up to that point which was being blamed on the owl was due to the diminished resource base and the productivity gains. I haven’t revisited the issue since I wrote the story for the Washington Post. But that $46 billion figure has got to be far, far too high. I led my story with the fact that the Georgia Pacific Company, among the largest forest products companies, had just moved its corporate headquarters from Portland to Atlanta because that’s where the new softwood resource base was located–on privately owned land in the Southeast.

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