Green New Deal: Efficacy as Determined by Game Theory


Jacob Reitman

I chose Climate Change for my Catalyst Conference topic because I think if nothing is done to fix it in the near future it will cause irreparable damage to life as we know it (besides all of the already extinct animals humans have killed off). The global average temperature is rising to an unsustainable point. Since I live in the USA, one of the big issues surrounding Climate change is AOC’s proposal of the Green New Deal (GND).

The concept the the GND has been around for a long time. The real backbone of most plans revolving around the end goal of 100% clean and renewable energy. Bernie Sanders ran with such a plan in mind in 2016, and the plan was revived by AOC in 2018. Almost all republican Government officials are against the program, and even democrats are very divided over the issue, so the chances it passes are quite slim. Another, non climate related issue with the bill is that AOC also wants to add some other stuff. According to Vox the bill, “It requires that the committee produce a plan that fully decarbonizes the economy, invests trillions of dollars, and provides a federal job guarantee, while addressing and mitigating historical inequalities. (Oh, and it might also include such “additional measures such as basic income programs [or] universal health care programs.”)” (Vox).

On June 26, 2018, Alexandria Ocasio-Cortez made history when she thoroughly defeated 10-term Congressman Joe Crowley, the fourth most powerful Democrat in the House, in New York’s 14th congressional district in the state’s Democratic primary. On November 6, less than a month after her 29th birthday, she emerged victorious in the general election to become the youngest woman ever elected to Congress. She’s up against all of Climate Change.

According to AOC’s own GND, here’s what will happen if Climate Change is not addressed.

“global warming at or above 2 degrees Celsius beyond pre-industrialized levels will cause—

(A) mass migration from the regions most affected by climate change;

(B) more than $500,000,000,000 in lost annual economic output in the United States by the year 2100;

(C) wildfires that, by 2050, will annually burn at least twice as much forest area in the western United States than was typically burned by wildfires in the years preceding 2019;

(D) a loss of more than 99 percent of all coral reefs on Earth;

(E) more than 350,000,000 more people to be exposed globally to deadly heat stress by 2050; and

(F) a risk of damage to $1,000,000,000,000 of public infrastructure and coastal real estate in the United States; and

(4) global temperatures must be kept below 1.5 degrees Celsius above pre-industrialized levels to avoid the most severe impacts of a changing climate.”

Game Theory is the study of mathematical models of strategic interaction between rational players. It sets optimal solutions for players based on their situations. That is what I will use to determine the optimal outcome of the GND. It is important to note that all players are not perfectly rational in real life, so the optimal outcome most likely is not the one that will be chosen. The game is shown below, with the preferred solution highlighted.


US Emissions

US Gov
Impose GNDDo Nothing
US CompaniesReduce Emissions-4,10,3
Do Nothing-10,-51,-9

These four options are the four most likely options regarding the US Climate problem.

1. The Gov imposes the Green New Deal and the people are forced to improve. Although in the long term the result will probably be good, the policy is not incredibly popular and in the short term will negatively affect profit.

2. The Gov does nothing and the people improve their output on their own time. This is the least realistic outcome but yields the best result as the companies are not pressured to change at a specific rate and the government won’t have to enact unpopular policy. The biggest problem with this solution is that change is a slow process when not pushed along, and it might be too little too late

3. GND enacted but no change. This is bad for everyone because the deal failed to change anything and companies are being fined left and right for violations.

4. If the government does nothing and the companies do nothing, the government will be blamed and the companies will eventually kill everyone.

The easiest way to solve this non zero sum game is to use backwards induction. Since the US Government is forced to move first, and they know both the outcome and that US companies are perfectly rational, they can make a move that works the best for them based on what they know the companies will pick based on the choice the Government gives them. If that makes no sense, this diagram should help.

It may seem as though companies fixing the problems themselves is the obvious best choice, the US Government knows that the companies will choose to do nothing because it benefits companies more to do nothing given that choice. However, if the Government chooses to impose the Green New Deal, then companies will actually suffer worse under imposed fines than if they actually make the changes. Since that choice harms the Government the least, that is the choice that will ultimately be made with completely rational players under these circumstances.

The only problem with this mathematical model is it fails to take into account the fact that all players are not perfectly rational, and that is not even the biggest problem. The biggest problem is that this is not an isolated game. If the US adopts the GND but other major CO2 producers, like China, do not, the US puts themselves at an economic disadvantage against those countries. That turns the environment into a sort of prisoner’s dilemma game where if one country continues their emissions output, it behooves other countries to do the same, lest they fall behind economically. What that leaves us with is a need for a global resolution to commit to a GND like agreement between all nations. The world needs to band together to save the one thing everyone can agree matters, the planet.

Works Cited

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  1. April 29, 2019 by Claudia Hamilton

    great work wow i love your project so much

  2. April 30, 2019 by Anna Sander

    Hi Jacob! This is a super interesting look at the Green New Deal that I haven’t seen done elsewhere. What do you think would be the best possible (realistic) result? Do you feel optimistic?

  3. May 01, 2019 by Francis.Davis

    Jacob, this project is really great! I’ve heard a bit about the GND but have never looked at it through a mathematical lens. You acknowledge that players don’t act rationally in real life, what do you think the outcome will be?

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