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Thinking Ahead: Let's Favor Long Term Over Short Run

Lawrence Summers and Richard Zeckhauser say politicians and bureaucrats should spend more time thinking about long-range policy.

When most people make decisions, the distant future isn't a chief concern. Politicians are no different, seldom planning beyond the current election cycle.

But when it comes to complex policy problems like climate change, nuclear waste storage and government science funding, such thinking may be shortsighted. In a working paper to appear in the Journal of Risk and Uncertainty, Harvard University economist (and the institution’s former president) Lawrence Summers and political economist Richard Zeckhauser argue that we should act with greater care toward future generations.

It's an approach that might seem foreign amid the crazy-busy, crisis-to-crisis lifestyle in America and much of the developed world. Even economists in the ivory tower and policy wonks sheltered inside think tanks find it difficult to incorporate the future into decisions.

The chief obstacle is uncertainty: Whether they're putting together highly technical models or informal reports, the further they look into the future, the less impact decisions made today are likely to have. Over time, events and actions intervene, swerving expectations off course and introducing too much complexity to reliably calculate the outcomes.

With climate change, for instance, experts can't predict whether global temperatures will increase by an average of 2 or 6 degrees Celsius during the next five decades — much less how those will affect ocean levels or plant life centuries from now.

"Planning for posterity, future generations and the indefinite future — all these things blur the ability to actually deal with problems," said Stewart Brand, a co-founder of The Long Now Foundation, which promotes long-term thinking across a range of issues.

Attempts at such forecasting have resulted in embarrassingly off-course pre-visions, such as "Limits to Growth," a report from international think tank The Club of Rome. It reported in the early 1970s that exploding population could deplete then-existing world oil reserves by 1992. Much else has taken prognosticators by surprise, from small innovations like Internet campaign fundraising to the unexpected, rapid thaw of the Cold War.

Few Americans demand long-term thinking from their leaders, prioritizing concerns like short-term job growth and national security. Far-off events, such as the near-certain bankruptcies of entitlement programs like Social Security, seldom make the agenda. Al Gore, winner of the 2007 Nobel Peace Prize for raising climate change awareness, downplayed his environmental bona fides during the 2000 presidential campaign.

"Politicians don't speak this way because they don't think it's going to resonate very much with the public," Zeckhauser said.

By holding their tongues and neglecting long-term troubles, Zeckhauser and Summers say, they may be setting us up for more difficult work down the road. The same uncertainty that makes long-term predictions difficult also means a wide range in the size of potential damages; in the worst-case scenarios, the longer we procrastinate, the more costly the solution.

Already, issues that might have been tackled earlier are rearing their ugly heads, from out-of-control state employee pension funds to crumbling critical infrastructure.

"We are currently saddled with problems that would be different had we thought about them differently decades ago," said Robert Lempert, director of RAND's Pardee Center for long-range policy.

It's not as if people are unable to incorporate such thinking into big decisions or even everyday lives. Biologically speaking, humans are short-term thinkers driven to survive and reproduce, but we often act in the long term. Our early ancestors evolved to plan their way through distant travels in hunting and foraging; modern scientists perform research that may not prove useful for decades or even centuries.

While long-term policymaking may be rare, it isn't novel: During the early 20th century, Los Angeles Department of Water & Power Superintendent William Mulholland led a controversial drive to purchase water rights in the Eastern Sierra and construct a massive aqueduct to transport the water.

Without such aggressive predictions of swift population growth and water demand, Los Angeles may have lacked the infrastructure to become America's second-largest city. The establishment of the United Nations has, for all its faults, promoted international cooperation on peace and security for more than 60 years. The U.S. Department of Defense is among a small number of agencies that make explicit decisions for the ultra-long term, partly because military staff often stay put for their entire careers, and the life cycle of weapons systems lasts decades.

Nevertheless, traditional policy analysis tools are hobbled by uncertainty, forcing researchers to choose which of several possible futures is likely, before the real decision making even begins. In adapting such methods toward forward-looking policies, Zeckhauser and Summers say planners must apply lower discount rates to the far future. Discounting accounts for the fact that people value a dollar in their pocket today much more than a dollar in the future — setting a lower rate means we're valuing future money (and people) at a level closer to the amount we'd assign to our own neighbors and possessions.

The Harvard researchers place particular emphasis on avoiding actions that could be costly for our descendants. Brand and Lempert, too, advocate decisions that keep future generations' options open.

RAND's long-term policy analyses employ computer models to create hundreds of millions of scenarios and then build adaptive plans that work best within as many potential futures as possible. Several local governments have hired the think tank to consult on water policy in the face of climate change.

Zeckhauser expects other politicians and bureaucrats will learn to adapt similarly to deal with a variety of approaching issues. He compares long-term thinking's place in the policy world to the state of risk research a few decades ago: When Zeckhauser was a student in the 1960s, risk and uncertainty were on the academic fringe. Now, they're at the core of economic research and part of real-world decisions, from investment banking to hurricane planning.

Already, "sustainability" has become such an oft-used buzzword among activists, corporations and politicians that it's almost a meaningless cliché. Yet with luck, debates that arise from such hackneyed language may save our grandchildren's grandchildren from us.

"I hope at the Democrat and Republican conventions in four years, somebody says America is doing a great job in the short run but neglecting the long run," Zeckhauser said.

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