First Order Effects are Only the Beginning

Do you want to spot someone who has zero understanding of an issue?  Ask them about second order effects.

What are second order effects?  These are the impacts of an action that occur because of the aforementioned action but are not the direct intent of the aforementioned action.

What is a good example of a second order effect?  Suppose for a minute that you decide to commute to work via bicycle several days a week.  The first order effect is that you have replaced a certain amount of miles driven with a similar amount of miles ridden.  Attendant to this first order effect is a reduction in greenhouse gas emissions, less income directed toward fueling an automobile, increase in physical activity, and just a general sense of doing good.

A second order effect, if the number of people replacing car trips with bicycle trips reaches a critical mass, is the reduced need for infrastructure maintenance, repair, or construction.  Another second order effect, again dependent upon the number of people making the switch, is a reduced need for outlets dispensing gasoline so perhaps the number of gas stations decline.  A further second order effect is that workplaces and housing would not need to devote so much space to the transient storage of automobiles.  This would open up a more diverse array of development opportunities since less space would be covered in striped concrete. And so on down the line…

The thing with moving beyond first order effects is that it widens the potential impact of any decision.

Take organic produce as an example.  Most arguments about organic produce fall into a cost benefit analysis vis a vis its potentially greater health benefits, whether from reduced pesticide exposure on the part of the consumer or increased nutrition.  However, there are a myriad of second order effects that may impact the decision to choose organic produce.  By buying organic produce you reduce the potential for synthetic fertilizers, pesticides, and herbicides to pollute the ground, water, and air.  By buying organic produce you reduce the chance that farmworkers are exposed to the same synthetic fertilizers, pesticides, and herbicides.  All of a sudden the argument that organic produce is “just not worth it” takes on a whole new dimension.

There is an element of nuance to this approach and nuance is somewhat out of favor in a world dominated by people like Donald Trump and Fox News.  It falls into the same category as externalities, which are economic costs borne by society at large as opposed to the entity that is directly responsible for them.  Think about carbon pollution.  Coal fired power plants do not pay anything for the cost of carbon pollution yet we all bear the costs.  It’s another concept that makes most dotards heads explode.

We need to move the discussion of most issues past just the first order effects.  If we capable of enumerating all of the ways a choice can be beneficial down the line through even the most minor of second order effects the impact might be transformative.

So, the next time your Uncle Carl has one too many wine coolers at Thanksgiving dinner and wants to debate the merits of bicycle commuting, organic food, solar panels, or whatever is on his Fox News hit list spend a minute to explain first and second order effects.

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