posted on 28 May 2016
from the Richmond Fed
-- this post authored by Tim Sablik
In 1908, an asteroid roughly 60 meters in diameter exploded over Siberia with a force a thousand times more powerful than the nuclear bomb dropped on Hiroshima. Fortunately, the event occurred over a largely uninhabited forest; had it happened above a major city, the losses would have been catastrophic.
While intercepting deadly asteroids seems like something from a movie, the idea is not confined to the realm of science fiction. The National Aeronautics and Space Administration (NASA) has successfully landed a spacecraft on an asteroid and used another to intercept and collide with a comet. These open the possibility of developing spacecraft designed specifically to deflect asteroids. Thanks to the great distances involved, diverting an object in space by just a small amount would generally be enough to prevent impact - provided the intervention occurs far enough in advance.
Both the United States and the United Kingdom have made some efforts at tracking "near Earth objects" (NEOs) that could pose a threat. But to date, scientists have discovered only a fraction of the asteroids in our solar system. As recently as 2013, astronomers were caught by surprise when an asteroid roughly 20 meters in diameter exploded as it entered the atmosphere over Russia, damaging thousands of buildings in six cities and injuring as many as 1,500 people.
"People tend to think about the really big asteroids that would destroy everything, like in the movies," says Scott Barrett, an economist at Columbia University. "But the much bigger risk is the medium-size asteroids because they're more common."
Like other types of disaster defense, protection against asteroids is a public good. Indeed, George Mason University economists Tyler Cowen and Alex Tabarrok devoted an episode of their popular online economics program, Marginal Revolution University, to asteroids as a case study in why markets tend to undersupply public goods.
In the early 1980s, economist Jack Hirshleifer at the University of California, Los Angeles proposed categories for public goods. One type is "summation" goods, which depend on the collective effort of all participants to succeed. An example would be reducing greenhouse gasses in the atmosphere: Action taken by one country to cut emissions would not be sufficient if other countries continue to pollute. This is the classic public good, and economic theory predicts that it will be underprovided by voluntary participants due to the presence of free riding.
In contrast, what Hirshleifer calls a "best-shot" good can be successfully provided by one party acting alone. Asteroid defense is an example of this; only one successful interception is necessary to protect everyone. In theory, this could make the provision of such a good more likely. Wealthy nations have the most to lose economically from an asteroid strike and are in a better economic position to fund defensive measures unilaterally. Other factors certainly play a role in such decisions, but developed nations like the United States and the United Kingdom and the broader European Union have been the most active in funding efforts to track and defend against NEOs.
On the other hand, free-riding problems could be even more pronounced with best-shot goods, as Hirshleifer found in experiments conducted with Glenn Harrison of Georgia State University. But in a bit of good news, Hirshleifer and Harrison also found that individuals contributed more to all classes of public goods than simple theory would have predicted.
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