01/04/2009 - 22:00

Spinning the perspective on cause and effect

01/04/2009 - 22:00

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Looking at data from a different perspective can produce strikingly different results.

Spinning the perspective on cause and effect

HAVING proved recently that I am not an economist, it's worth noting how much we all dabble in dark arts we know little about.

Take science, for instance. In this era of global panic about climate change, we are all increasingly making observations about the weather and related incidents and attributing them to that phenomenon.

Bush fires in Victoria, a hot week in February, floods in Queensland all seem to add up - from an amateur point of view. That is especially the case when the professional scientists have already told us it is happening.

It's a very small leap of faith, then, to agree with the proposition that we have to do something about it.

But I am hearing more and more voices challenging this course of action.

The schools of thought are at the extremes. One is that we are so far down the path to dramatic climate change that it is irreversible. In other words, we should forget about fighting and simply prepare to live with it and its consequences.

At the other extreme is the view that man is not impacting on the earth's climate, as has been suggested, and that climate change, if there is any, is almost completely due to natural causes.

Of course, there is an acceptance in mainstream society that climate change is real and that human behaviour has caused it. Furthermore, the argument runs that, even if there's a chance that climate change is not manmade, it won't do us any harm to cut back on our usage.

I have some sympathy with that latter argument. I believe we are wasteful and inefficient. Laws to rein in CO2 emissions will help to create a new generation of machines that are more energy efficient.

But at what cost? The federal government's proposed scheme, which has been delayed, risks taking that position too far by adding so much of a burden that it will drive big energy users to other, less regulated countries. The result could be to increase the net production of carbon and hurt our own economy. Is this clever?

I agree that developed nations like Australia need to be leaders. But do people here - who, notably don't pay anywhere near the true cost of electricity as it is - realise the shock to the system that we are contemplating?

To me that would be reasonable if I was convinced that by taking strong action we would make a serious difference to a real problem. However, I am not fully convinced, which takes me back to the role of science.

I had an interesting lesson on how science works when I read a recent paper by Michael Dockery - from the Centre for Labour Market Research & School of Economics and Finance at Curtin Business School - about the cost of raising children.

To date there have been several studies on this subject that have reached the conclusion that bringing up kids is an expensive business.

I am sure readers are familiar with the headlines that raising babies to adulthood costs hundreds of thousands of dollars. It's enough to make many consider the alternative.

As a parent, it certainly struck me that those studies and headlines do have an effect. Some people may delay or put off entirely their plans to have a family.

Others voice their concern through political channels, which redirects government spending to help families overcome the financial burden of raising children. Our tax system and profligate family rebates are testimony to this thinking. Baby bonuses abound to relieve the suffering.

Yet Dr Dockery has looked at this subject again and come up with a whole new way of working out the cost of raising children.

In fact, he suggests there's barely a cost at all.

Past studies, it appears, have looked at the cash flow situation of families to derive the cost of children. Typically this is two-pronged - the drop in income and the changes in expenditure.

By comparing the income and spending habits of childless couples with those who have children there is a big difference in the standard of living. That difference is then reflected as a cost - $537,000 to raise two children to age 21, according to a 2002 study.

But does this do justice to the real situation of raising a family?

By assuming that most people choose to have kids, and therefore there must be something more than just a cost involved, Dr Dockery has approached the data differently and come up with a very different conclusion.

Instead of looking at money in, money out, this study uses wealth or savings as the key measure. By comparing the wealth of childless couples against that of a family after rearing children, Dr Dockery found that the difference was miniscule.

There is some sense in this.

People with children tend to spend less on holidays and going out than their childless peers. Some of this may well be forced on them, as those of us who've raised children will know.

However, there are also great pleasures in having children that (depending on the individual) may well be better than eating at fancy restaurants every night of the week or going skiing in Chile on a whim. Certainly there ought to be something positive about raising kids otherwise so many people wouldn't do it.

While Dr Dockery may not appreciate me linking his work to any questioning of the scientific community's work on climate change, I couldn't help drawing the parallels.

Here was a bloke who has challenged a position accepted by many that was based on good science. In fact, it was because it was based on good science that the public accepted the idea.

I would argue that we probably found things to justify why the science was right, rather than doubting the logic.

Inspired by his wife, who actually objected to children being considered a cost, Dr Dockery took the same data available to other scientists and has come up with a different result.

While I have no doubt that the resources applied to climate change research are many times the scale of that applied to the cost of raising children, there does seem to be a lesson here.

The cost of raising children is not as complex as a weather system. The data is simple and the proposition obvious. The initial approach led to a conclusion that became accepted as the norm. It took someone who doubted the outcome to relook at the data and come up with a totally different result. That is the process of science.

Often, it is only when that new theory is presented to you that you realise how flawed your acceptance of the other proposition really was.

Is it possible the case may be the same with climate change?

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