Michael Greenstone — a pillar in the nascent field of environmental economics — is developing a scientific method for calculating the costs and benefits of environmental measures, and he’s using the approach to better understand issues of climate change, air pollution, and energy consumption.
“We have a limited amount of resources, and I want to help make sure that we’re devoting them to the environmental areas where there’s the biggest bang for the buck,” Greenstone says.
The dual challenges of climate change and energy supply require critical decisions, and Greenstone, 3M Professor of Environmental Economics, is on a mission to supply the data people need to make good choices, whether working out how to build a global carbon trading market or determining the payback on insulating their homes.
Greenstone is now focusing on the effects of climate change on the United States and India. He’s found that people in the U.S. are wealthy enough to adapt to a warming planet, but India faces a markedly increased mortality rate. This underscores the reality that the costs of climate change are not going to be evenly distributed across the globe, Greenstone says.
His current projects include studying the effects of indoor air quality in the Indian state of Orissa, creating market incentives for enforcing environmental regulation in India, and identifying what causes people to undertake home energy efficiency improvements in the U.S. and calculating the costs and benefits of these investments. He’s also collaborating with a current graduate student and colleague at Harvard to launch an air pollution trading market in India. The goal is to gain experience that can eventually help create a global greenhouse gas market that includes India and other developing countries.
Greenstone is currently Director of the Hamilton Project at the Brookings Institution. The project aims to inform public debate with evidence-based economic policy proposals. Greenstone recently served as chief economist for President Obama’s Council of Economic Advisers, a role in which he briefed the President and gained an up-close view of the policymaking process.
Greenstone began his graduate studies at Princeton in labor economics, but changed course to study the economic aspects of environmental issues. It’s an area with lots of room to advance the scientific literature and improve social welfare, he says. “Not much is known, and the stakes are high.”
The field is still establishing itself. “As one of my thesis advisors jokes, I am the greatest environmental economist Princeton has ever produced — but I am also the only one,” he says.
At MIT, Greenstone is aiming to bring credibility to environmental economics by raising the standards of evidence for economic theories and applying rigorous scientific method to data collection and analysis. MIT is the perfect place to do this, Greenstone says.
“Our department has a perfect combination of theorists who work on real-world problems and empiricists who are fellow travelers in the credibility revolution in other fields in economics.”