A Review of The Great Displacement: Climate Change and the Next American Migration

An Economist's Perspective

Jake Bittle is a very smart graduate of the University of Chicago. His new book will be influential and it will be widely read. We follow each other on Twitter! But, this talented author chooses not to incorporate any ideas from the University of Chicago Economics Department’s past or current faculty. As the author of two related books, I am sad that my work didn’t merit a discussion here. For those who want to jump and read a two pager, click here to learn about my 2010 Climatopolis book. In short, Jack is a “doomer” and I am an optimist. His book will sell!

The irony in my work is that because I am so worried that climate change is a serious danger, I am highly optimistic that we will adapt because of our use of free markets rewarding resilience ingenuity. The private sector adaptation to the COVID crisis (see the University of Chicago’s Casey Mulligan’s work documenting this point) only increases my confidence about this claim.

Back to Biddle. As a talented journalist, Jake takes us around the United States. Our tour takes us to; Big Pine Key, Florida, Kinston, North Carolina, Santa Rosa, California, Pointe-Au-Chien Louisiana, Houston Texas, Pinal County, Arizona and Norfolk, Virginia. Along the way we learn about the history of the area and long time residents who have planted roots there. He is absolutely right that each of these areas face special challenges and that Mother Nature is throwing harder punches at these areas. These case studies allow him to flesh out his thesis that the U.S is on the verge of becoming a nomadic nation as we rush around seeking higher ground to avoid the next Biblical Plague that climate change will cause.

Economics Point #1: Market price signals can help each of these places cope with the new challenges it faces. Consider drought in Arizona. Last week, I released this short piece on how to use customized water pricing to encourage conservation in the drought areas. Basic ideas from economics can be used to reduce the “Collapse” scenario. Climate change increases scarcity and prices need to rise to encourage conservation and innovation. We design a mechanism for protecting the poor. I’m hoping Jack will talk about our work.

Economic Point #2 In wildfire at risk places such as Santa Rosa, California , the insurance industry can be a force encouraging adaptation if Government regulations do not preclude the ability of insurers to engage in risk pricing. To Jake’s credit, he sometimes explores the unintended consequences of government activism in discouraging adaptation. To see the specifics about risk pricing in fire zones and flood zones, read our Harvard Business Review piece. I wrote this with two USC undergraduates! Again, did Jake take Allen Sanderson’s class at our University of Chicago?

Economic Point #3 The death toll from natural disasters is falling sharply in the United States because we are growing richer. Richer people and richer places have an ability to protect themselves. In a nation of 340 million people, something horrible happens every day but the growth of our economy gives us an expanded capacity to protect ourselves. Economic growth is an adaptation strategy. Of course, we need to do a better job protecting poor people and poor places. Read my 2017 Brookings Paper on this subject.

Economic Point #4; Flood control in Houston raises several interesting economics issues. In my 2021 Yale Press book Adapting to Climate Change, I argue that we need to change our zoning code to allow more urban land to be rezoned for high rise buildings. During times of low crime, people are willing to live in closer physical proximity. There are plenty of rich people in Manhattan living tall buildings. If Houston rezoned and built taller buildings on higher ground that faces less flood risk, then more land could be set aside for flood control. Interesting political economy issues arise for why this zoning change has not already occurred. This merits more research!

Economic Point #5; In my 2010 Climatopolis book, I argue that locations always compete against each other to attract and retain the footloose educated people. The rise of Work from Home only increases the degree of this competition. The possibility that places could have a brain drain actually creates a competitive incentive for such places to invest in resilience. At no point in his book does Jake talk about the benefits of competition. He gains from competition every day as he chooses a coffee place, as he chooses a cell phone plan and in every other facet of his life

Economic Point #6 Jake never really discusses how real estate design innovation can protect places. Consider Norfolk, Virginia. Jake gives some fascinating details about Larchmont an area on the banks of the Elizabeth River. How will this coastal area adapt?

In October 2022, the Washington Post published this optimistic piece about experiments already being launched to help such areas to adapt.

Click on this Google links I created and you will see dozens of ideas and approaches for helping the area to adapt. As a graduate of the University of Chicago, does Jake really believe that the engineering and design community will make no progress over the next 30 years? If we fail in the U.S, we can turn to the rest of the world such as the Dutch and to Asia to learn from their approaches. Back in 1983, Paul Romer (who would later win the Nobel Prize) finished his University of Chicago PHD exploring the role of new ideas in fueling economic growth. Such ideas are “non-rival” such that once we have created it, it can be adopted everywhere.

If Jake had asked me to provide an economist’s perspective on his book, I would have nudged him to read my co-authored 2017 paper on the optimal durability of housing.

Here is the abstract of our paper.

“The durability of the real estate capital stock could hinder climate change adaptation because past construction anchors the population in beautiful and productive but increasingly-risky coastal areas. However, coastal developers anticipate that their assets face increasing risk and this creates an incentive to seek adaptation strategies. This paper models climate change as a joint process of (1) increasingly destructive storms and (2) a risk of sea-level rise that submerges coastal property. We study how forward-looking developers and real estate investors respond to the new risks along a number of dimensions including their choices of location, capital durability, capital mobility (modular real estate), and maintenance of existing properties. The net effect of such investments is a more resilient urban population.”

I would have spoken to Jake about a future of modular housing that can be disassembled and rebuilt on higher ground. Facing the “known unknown” of climate change it is important to not “lock in” with irreversible costly sunk (literally!) capital.

NOW , we are ready to talk about migration.

Economic Point #7 Back in 1962, Larry Sjaastad of the University of Chicago wrote a famous paper about the economics of migration. He argued that migration is an investment such that you move if the expected lifetime benefits of moving exceed the upfront costs of moving. If Jake had majored in Economics at our University of Chicago, he would encountered the Rational Expectations hypothesis associated with Uchicago’s nobel laureate Robert Lucas.

Jake is right that migration is costly so people have a strong incentive to think through what their quality of life will be life in the place they move to. This actually helps us to adapt to climate change because people will think about what Phoenix will be like in the year 2040 before they move there. Jake points out that First Street Foundation is providing this “Paul Revere” data helping grown ups make informed decisions. Read my piece here on this point.

So, I would say that we need more migration to help people to adapt to climate change. A competition is about to play out. Those areas that prove to be resilient either due to topography or good urban planning or due to private sector innovation such as more powerful air conditioners or improved water desalinization techniques will grow. This competition helps all of us.

Economic Point #8

Jake appears to view all migrants as “victims here”. Here are two recent papers that disagree with Jake. The first features Uchicago’s freakonomics star steve levitt as a co-author.

Deryugina, Tatyana, Laura Kawano, and Steven Levitt. "The economic impact of Hurricane Katrina on its victims: Evidence from individual tax returns." American Economic Journal: Applied Economics 10, no. 2 (2018): 202-233.

Nakamura, Emi, Jósef Sigurdsson, and Jón Steinsson. "The gift of moving: Intergenerational consequences of a mobility shock." The Review of Economic Studies 89, no. 3 (2022): 1557-1592.

Both of these papers use Big Data, not anecdotes to document that the average migrant who is forced to leave an origin due to a natural disaster enjoys income gains because they move to the right place for them. This is Sjaastad’s point from 1962!

Of course, $ isn’t everything but with Facebook and cell phones and cheap air travel one can stay connected to one’s old social network.

I respect that Jake celebrates the local culture that each of the places he visits features but substitutes always exist. If I hadn’t read Jake’s book, I would have read something. If you hadn’t read this screed, you would read something else. No place has a monopoly on us . Zuckerberg is creating the “Metaverse” for us (not me) so that we have a virtual place to meet.

FINAL Economic Point : A key idea I emphasize in my 2021 Yale Book (that Jake didn’t read) is the overlapping generations point from economics. We are young, then we are middle aged and then we are old. He is right that the old have planted roots in a place but the next generation won’t if he is right that the place is doomed. This means that the losses are finite.

In my 2021 Yale press book, I talk about outdoor hockey in Canada. If Canada warms and the ice melts, the old timers will miss their youthful passions but the new young will develop new passions. This is adaptation! Such substitution is missing from Jake’s book as he discusses people as if they are creatures who can only live in one eco-niche.

In my work, I argue that we are highly diverse. Some of us are quite flexible and willing to try new things while others of us are more stubborn. Jake is right that those who are locked in such that their “conception of the good life” is tied to a single place do face more risk.

University of Chicago economics teaches us that if they are renters and are renting in a risky place then their rents will decline and this will be an equalizing difference for taking on the place based risk rather than moving to higher ground. My mentor University of Chicago mentor Sherwin Rosen would have won the Nobel Prize for this general idea. You can read about his work here.

Jake’s book will sell and it will interest people (including my mother). To my frustration, he doesn’t engage with any economists’ work. This book would be stronger if he gave the economists a chance to shine!