"My great advantage as an environmental economist is that I'm not an environmentalist."   - Michael Greenstone. Photography by Nitesh Sule/Flickr

The Quest for Data-Based Policy Making at EPIC and Urban Labs

When economist Michael Greenstone, LAB’87, entered graduate school at Princeton University, he had the naiveté of a 24-year-old who wanted to make a difference. His hope was simple: “I wanted to find truths that made the world better for people.” He wasn’t sure how to achieve this dream, but economics was the road there.

Planning to work on labor economics issues, Greenstone changed direction after being struck by how environmental debates were “almost completely devoid of anything that resembled impartial evidence. He thought that constraining the environmental conversation, which is often overrun by wild claims and speculation, with testable and reproducible results could lead to more fruitful outcomes. What he was seeing then, and is still prevalent now, is “policy-based evidence making”—parties with vested interests, like lobbyists and industrialists, shaping information to support regulation (or deregulation) that benefits them. Greenstone envisions instead a world run by evidence-based policy—regulation based on unbiased research that benefits the greater good.

Greenstone, a third-generation UChicago faculty member who followed in his grandmother’s and father’s footsteps, first joined the University as an assistant professor of economics in 2000, leaving for MIT in 2003. In 2014 he returned as the Milton Friedman Professor of Economics and director of the interdisciplinary Energy Policy Institute at Chicago (EPIC). “My great advantage as an environmental economist,” he says, “is that I’m not an environmentalist. Of course, I care about the environment because it supports human well-being. However, plenty of other things do too like higher incomes, reduced poverty, and better health. We have to find the right balance, and I think the path toward the balance is paved with data, not rhetoric.”

In July Greenstone will complete his first year at EPIC, where the goal is to produce pioneering, energy-related research and use it to influence energy and environmental economics policy. As chief economist for the Council of Economic Advisers during the first year of the Obama administration, Greenstone witnessed the “vast gulf between what goes on in the real world and what goes on in academia. There are incredible, excellent ideas locked up inside academia with no good way of getting out.” The key, he says, is to communicate ideas and research to policy and decision makers in languages and formats they’re comfortable with.

EPIC has applied several methods for better research-to-policy translation in the past year, both in Chicago and around the world. On campus EPIC encourages collaboration through congregation. The institute holds weekly lunches for research in progress that aims to foster interdisciplinary exchange. “We have engineers sitting next to lawyers sitting next to economists sitting next to geoscientists, and that has produced interesting conversation and insights that would not have occurred otherwise,” says Greenstone. A monthly, campus-wide seminar series features outside speakers who present energy-related topics from fundamental geology to geoengineering to environmental regulation enforcement.

One achievement this past year exemplifies the institute’s global engagement—the opening of an office in the University’s Center in Delhi. India made sense because, while “there’s no question that understanding energy, energy markets, climate change, and the environment through the lens of the United States is critical,” says Greenstone, “many of the most interesting energy problems are in today’s developing areas.”

Countries like India and China have escalating energy consumption and unprecedented levels of air pollution. “It would be like a bank robber who avoids banks, to not have big developing countries as a central component of EPIC’s activities.” The Delhi office hosts a seminar series, including visits from ministers and other elected officials, and serves as a hub for faculty research. Several projects run out of EPIC-Delhi are testing a new model of research as they are conducted as collaborations with regional governments or Indian agencies, including the States of Gujarat, Maharashtra, Bihar, and Tamil Nadu.

Greenstone already had experience in India after he and colleagues from MIT and Harvard led a two-year field experiment devised hand in hand with the Gujarat Pollution Control Board. The research, published in 2013, identified an area for reform in government regulations of heavy industry and ran a randomized controlled trial. Some industrial plants were assigned new regulations in emissions audits, while others remained unchanged; the data showed that the reformed plants reduced their pollution significantly.

Designing research projects with governmental cooperation facilitates policy making, Greenstone says. The government knows the work well and is invested from the beginning, making it easier to turn the results into policy. In January the State of Gujarat announced broad implementation of the new regulations. “That’s what the finish line looks like.”

Too often energy and environmental issues are viewed as engineering problems—that if “we could just get the right widget, or install the right piece of pollution abatement equipment, everything would be fine,” says Greenstone. “But at the end of the day all these things are really economics problems,” and that is why the University of Chicago is an ideal place for EPIC. The power of ideas, particularly in a field as crucial to human welfare as energy policy, cannot be overstated, he says, and at UChicago ideas are “subjected to the most critical inspection. That has remained constant, and it’s incredibly exciting to be at a place like this—sometimes daunting as your ideas are picked apart.”

In addition to EPIC, Greenstone also leads the Energy and Environment Lab, one of five UChicago Urban Labs that design and test urban policies and programs. Greenstone’s lab, a health lab, and a poverty lab join the already influential crime and education labs in the new Urban Labs network—announced in March—aimed at using scientific methods to solve urban problems, further realizing evidence-based policy making.

- Maureen Searcy