aspect of the situation—what we call, for lack of a better term, the “human dimension.” The human dimension refers to the rich mixture of cultural practices, social interactions, and human feelings that influence the behavior of individuals, social groups, and public and private institutions. To consider the human dimension is to recognize that the behavior of individuals and institutions is multiply determined.1 This may seem an obvious point, but it has important ramifications.
Most analyses proceed from the simplifying assumption that energy producers and consumers are rational economic actors: that is, that they are motivated to maximize the value of some objective function, such as income, profit, or organizational size. Individuals and organizations are assumed to behave as if they had carefully calculated their self-interest and acted accordingly. This assumption is a useful simplification. It accurately predicts, for example, that when oil prices rise relative to the prices of other fuels, some energy producers will invest in oil exploration, and some energy users will switch to other fuels or purchase more energy-efficient equipment. But such aggregate truths conceal great variation among energy producers and users, and some of that variation can be understood in terms of other concepts and analyses. People have values, dreams, and social needs, and they sometimes act on them. They often act out of habit, laziness, duty, trust, or a desire to please others, and they act differently than they would if they were to carefully calculate their self-interest. People also form organizations, families, political parties, and social movements, and these social groups, like individuals, are more than rational economic actors. Groups, organizations, and governments often follow routine, precedent, ideology, or the example of a leader rather than act on careful calculations. Their choices among alternatives certainly are influenced by analyses of expected costs and benefits, but they are also influenced by other factors: the outcome of internal political struggles, the recent choices of similar groups, the desire to promote socially shared values, and the personal preferences of individuals in powerful positions. Social groups maintain coalitions out of tradition, build monuments for prestige, and fight battles for honor.
After the fact, many of the actions of individuals and groups can be interpreted as if they were the result of rational calculations of self-interest. But for policy purposes, it is crucial to be able to predict, as well as to interpret, the behavior of individuals, groups, and institutions. It is also essential to have a wide range of policy alternatives available for debate and adoption as energy conditions change.
Several recent events demonstrate that there is a pressing need for improved prediction as well as for new policy options for energy. In the past, analysts