A key to understanding the “environmental fallacy” is to realise that it is a myth.
“A common fallacy in economics is the one that if you buy a house, you’ll get a better property, and if you sell a house you’ll have a worse one,” says the professor of economics at the University of Queensland, Paul Krugman.
“It’s a big myth,” he says.
But it is also an extremely common fallacy.
According to Professor Krugman, it is very common to see people who believe the “ecological fallacy” in the way that they think about buying and selling a house: buying a house to live in, and then selling it for less money than it was originally worth, for example.
The fallacy is that the house was originally a good investment, that the “cost of living” will be cheaper than the property, so people will choose to live there, and so the house will be worth more.
“People believe that the cost of living is cheaper than other houses because of the environmental fallacy,” Professor Krugman says.
“But that’s not true.
People are buying houses to live, they’re not selling houses to rent.”
Professor Krugman is not alone in his belief that the ecological myth has taken root in Australian economics.
The economist who coined the term “ecology” in 1970, the University’s Professor Peter Bourke, is also a fan of the myth.
He told the ABC the myth has become so entrenched in Australian politics that the government itself has become a “fairy tale”.
“It has become an integral part of Australian politics and its a very strong myth,” Professor Bourke says.
The myth is so entrenched that even the Prime Minister’s Department is named after the myth, with the Department of Environment and Energy and Environment Minister Mark Butler-Sloss taking on the role of the “Fairy Godfather”.
The myth was created as a political tool for the ALP to make its case to the public.
For example, in the lead-up to the 2013 federal election, the Prime Ministers Department produced a “climate change report” that featured the myth of “ecocide” in it.
The document was sent out to more than 1,500 households and used as a campaign tool, the ABC reported.
“There is this myth, and the myth is this: the environment is going to get worse because we’re burning fossil fuels,” Professor Butler-Skloss told ABC Radio National.
“And the reason why is because we are burning fossil fuel and we’re dumping our emissions into the atmosphere and it’s putting our environment at risk.”
The ABC asked the Prime Minster’s Department for comment.
“I can confirm that we do use a fair amount of data to back up the claim that the environment will be getting worse,” Mr Butler-Screw said in response.
“The environment is not changing at all.”
But Professor Krugman said the myth had become so widespread because it was a way to justify political policies.
“When the Labor Party is doing that, it’s a way of justifying the policies that they’re pursuing and justifying the economic policies that the Labor party is pursuing,” he said.
Professor Krugman and Professor Bourk say the myth can be explained by the fact that when people buy a property, they think the price of the house is going up and that’s what will be happening when the property becomes more valuable.
“We can’t just take a price that’s been inflated, we can’t take a property that has been inflated and say, well, this property is going down, and we are going to have to do a little bit of adjustment,” Professor Byrke said.
“So, we’re going to need a little adjustment to the real cost of this property, the real price of this house.”
But the myth also has a long history in economics.
“Economists were trying to understand how markets work, so they were looking at the effect of the prices that individuals were making,” Professor Krug says.
It was Professor Krugman who first coined the concept of the eco fallacy. “
That’s a long-standing tradition in economics, and it has to do with how you think about the real world.”
It was Professor Krugman who first coined the concept of the eco fallacy.
“Ecological fallacy is an old, old-fashioned fallacy, but it’s also the first time I’ve seen it in Australian economic policy,” Professor Darling says.
That was in the 1970s, when the then-Labor government was looking to improve its record in elections.
“They were looking for ways to get more votes, and they wanted to get people to believe that they were more economically responsible than the other parties, and that they should support their party,” Professor Newman says.
After the election, a report by the former Labor government on how to improve the economy was commissioned.
But the document was labelled an “environmentalist” document and was never released.
The report’s authors did not agree with the findings of the report, and instead chose to write their own