The U.S is in the midst of a painful nationwide heatwave. We know that Bezos and Musk sleep well but what about everyone else? Whose job is it to protect the most vulnerable amongst us?
Economics majors are required to take intermediate microeconomics. For my readers who have never taken intermediate micro (and know some basic math), take a look at Preston’s free book. Read Chapter 9.
To concisely focus on my main points, permit me to set the stage by discussing the George Stigler “Diet Problem”. Over 70 years ago, Stigler asked; given the daily nutritional requirements for a person of a given age and size, and given the market prices for different foods; what is the minimum $ expenditure on food necessary so that the person achieves her basic nutritional needs?
Stigler solved a linear programming problem here because each food embodies bundles of nutrients. For example, a slice of pizza may have carbos and some Vitamin D. (I am making up this last point!). If a person needs 200 units of Vitamin D a day and if a pizza slice contains 10 units of Vitamin D, then one feasible way to meet your nutrition goal is to eat 20 slices of pizza. I am kidding here but I’m trying to build up your intuition.
Stigler documents that at a very lost cost in terms of $ a person can eat a beans based diet and achieve her nutritional goals. Of course, most people don’t like to solely eat beans but Stigler’s point is that at a very low cost —- poor people could eat. The open question here is “who pays”. Do poor people earn the $ to pay for their own food or does society feed them through transfer programs?
The same general issue arises with respect to adapting to the high heat. Everyone needs to cool down when it is hot. There are many possible strategies for achieving this. One can sit in the shade. One can take multiple cold showers. One can go to the beach. One can crank up the air conditioning. Each of these actions has a cost in terms of time and money. Some of these actions require access to capital (such as air conditioner) that not everyone has access to.
On their own each person, will choose their best strategy to adapt to the heat. The public health worker observes each person’s health at the end of a hot day. The poor are likely to suffer more from the heat because they have access to fewer of these self-protection strategies.
The economic agenda here is to measure the real expenditure (measured in time and $) to offset one’s heat exposure. How costly is it? Are these costs actually declining over time? This could occur because of innovation.
With this background, we can now look at the demand for Los Angeles Public Cooling Centers during the ongoing heatwave. As an empiricist, I am interested in who actually shows up to these centers? How far do they travel to go to the center? How do they get to the center? How effective are such centers in reducing the vulnerable’s heat exposure?
Is it cheaper for the City of Los Angeles to give all registered poor people a portable battery charged Fan? Are such private products a close substitute for the Cooling Centers? Are unregistered immigrants more comfortable visiting the Cooling Centers where they do not have to offer documentation?
How cost effective are these cooling centers? Could the City simply give poor people more cash before a heatwave breaks out? If few people are using the LA Cooling Centers then their average cost per user will be high and economists such as myself will argue that they are not cost-effective. Important complementarity issues arise. If the City of LA offered a 50% ride sharing subsidy through a pooled Uber ride to the shelters, would more poor people use them? This would reduce their heat exposure and reduce the Average Cost of the Cooling Center services (due to economies of scale of running such a Center). Note how I suggest how to create a public/private partnership to protect the poor here. This is just one example of the benefits of bringing in for profit firms to help to protect the poor.
Consider another example. Many poor people live in low quality housing in high crime areas. If crime declines in such areas, people would open their windows and spend more time at night outside. This example highlights another complementarity between street safety and less heat exposure. This Sociologist’s book expands on this book based on the effects of a terrible 1990s Heat Wave in Chicago.
What are our strategies for protecting poor people from increased extreme weather? What is the most cost-effective strategy? Returning to Stigler’s beans and the diet problem —- would the urban poor prefer to receive the cash or the Cooling Center? Would they use the extra cash to cool themselves?
The microeconomic approach to adapting to climate change focuses on questions such as these.
In the medium term, we protect the poor from crazy weather by helping them and their children to be more productive workers. Go to this website to learn more about the economic approach for creating more flourishing people.