Race, smoke and suicide, Doctor Strangelove and those bombs

Whether by accident or design, this collection of essays is well timed to celebrate Thomas Schelling's winning the 2005 Nobel Prize in Economics. With one minor exception all the essays have been published previously. On the scale of Schelling's long career, most are relatively recent productions. All the characteristic features of his work - the breadth of his interests, the originality and creativity of his theorising, the intellectual rigour of his policy analysis and the freshness and clarity of his writing - are on display.

The title essay is an elegant reprise of the work for which Schelling is best known among his fellow economists: the study of strategic commitment. Several essays explore the possibilities of commitment as a mechanism of self-control. Schelling treats the individual as a collection of selves, interacting strategically with one another. He writes with empathy and imagination about the strategies by which one self tries to forestall choices that another self will want to make, and the countervailing strategies by which the latter tries to evade the constraints imposed by the former. Drawing on personal experience, he is particularly insightful about the conflicts of motivation faced by smokers who want to become ex-smokers and by committed ex-smokers who continue to desire to smoke. He also has important things to say about commitment and countercommitment in the case of suicide; he bravely presents the case for legalising assisted suicide. Another essay, written in 1996, uses the Vietnam War to illustrate how difficult it is for any government to get out of a war, however disastrous, to which it has committed itself. This should be required reading for American presidents and British prime ministers.

For me, Schelling's greatest contribution to economics is his analysis of "focal points" - the still only partially understood mechanism by which agents, when they have a common interest in co-ordinating their behaviour, converge on solutions that are identified by salient but seemingly irrelevant "clues". Disappointingly, this idea is touched on only in these essays. Schelling has been particularly concerned with the mechanisms by which warring nations tacitly accept mutually advantageous limits on the weapons they use. When he first wrote on focal points, in 1960, some US military strategists saw the distinction between nuclear and "conventional"

weapons as an irrational taboo, preventing the deployment of small-yield nuclear weapons. Schelling used his analysis to urge governments to do everything possible to maintain that distinction. In one thoughtful essay, written 55 years after Hiroshima and Nagasaki, he reflects on the continuing acceptance of the principle that nuclear weapons are not there to be used.

Several essays deal with climate change, an issue with which Schelling has been concerned since the early 1980s. His overview is that global warming will have serious effects on poor countries with large agricultural sectors, but that rich countries, particularly the US, will be largely immune. In rich countries, he says, most economic activities are independent of climate; most of the negative effects of global warming can be overcome by technological adaptations. He argues that treaties on the model of Kyoto, which commit nations to overall emission targets, are unlikely to work, and instead holds out the hope of international agreement to finance "geo-engineering" solutions.

I hesitate to disagree with such a reliable policy analyst, but I cannot help feeling uneasy about these messages. The inhabitants of rich countries - the people whose consumption is primarily responsible for climate change - are being told that the costs of their actions will not fall on them. By using mitigation technologies, most of which will further increase greenhouse emissions, they can expect to pass on these costs to other countries and to later generations. Like the idea that a nuclear bomb is just another weapon, these are dangerous thoughts: they undermine the motivation to seek international agreement on climate policy. Of course, a huge bargaining problem has to be resolved in reaching a mutually beneficial agreement on emissions; but that is just the kind of problem for which one might look to Schelling's theory of focal points for guidance.

In recent years, following the development of evolutionary methods in game theory, Schelling has become famous as a pioneer of "social dynamics". This fame is due to a paper he published in the Journal of Mathematical Sociology in 1971, presenting some abstract models of evolving patterns of racial segregation. The main insight was that almost complete spatial segregation tends to come about if people are averse to living in neighbourhoods in which their own racial group is a small minority - even if no one objects to living in evenly mixed neighbourhoods. A much abbreviated and revised version of the paper was included in Micromotives and Macrobehavior , a collection of Schelling's essays published in 1978.

Most subsequent commentary has used the 1978 text. To try to ensure the survival of the original version, Schelling has included it in this book, where it takes up more than 60 pages. For many game theorists, this will be the highlight of the collection.

Schelling expresses disappointment that most commentators have overlooked his analysis of "bounded neighbourhood" models. This was presented only briefly in the 1978 paper but at great length in the original. These models have no spatial dimensions; there is just one "neighbourhood" that individuals of two races can choose to enter or leave with no constraint on the total number of people the neighbourhood can accommodate. Each individual's entry decision is governed by the current racial mix. These models have some counterintuitive properties. For example, there are cases in which an increase in one race's tolerance for the other can destroy a previous pattern of integration.

The two versions of the paper are subtly different in tone. In creating the 1978 paper, Schelling edited out a large amount of abstract mathematics that explored different configurations of his models. At the same time, he added some less formal discussion, written with characteristic empathy, of the psychological experience of the choices that induce segregation. Using the example of a dining hall at a baseball camp, he explored the feelings of self-consciousness and embarrassment that, for individuals who are conscious of racial difference, accompany the simple choice of where to sit. As a result, the 1978 paper reads as an attempt to represent, in a simplified way, what the author perceives to be real social forces. The original paper reads much more as a study of abstract mechanisms offered in the belief that these may prove to be useful but without any specific claims about how they connect with reality. Despite Schelling's fondness for the original paper, I think the later version is a better exemplar of his methodology. Finally, I must mention one of the most enjoyable essays in the book, which recounts Schelling's role in the production of the film Dr Strangelove . To find out what this was, you must buy the book.

Robert Sugden is professor of economics, University of East Anglia.