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Many policymakers adopt a macro approach to environmental problems in emerging markets (countries experiencing rapid economic growth): discussing ambitious regulations in global faums and looking to giant multinational companies and non-governmental organizations (NGOs) for insight. But examining what successful companies in these countries are already doing to make growth more environmentally sustainable may make more sense.

One study identifies several such firms that are turning eco-consciousness into a source of competitive advantage. The most salient quality of these highly profitable companies Is that they turn limitations (of resources, labor, and Infrastructure) into opportunities. An Indian cement company suffering water shortages developed the world's most water-efficient cement-making method, using air-cooling rather than water cooling. A Philippines utility reduced its water loss through wastage and illegal tapping from 63 percent (1997) to 12 percent (2010) by making water more affordable for lower-Income consumers. A Chinese company makes air conditioners powered with buildings' waste heat, reducing strain on the electric grid.

The companies also seek to shape their business environment to support sustainable objectives. Some lobby regulators: a Brazilian organic-sugar producer works with Brazil's government to establish an organic certification system. Some form partnerships: Kenya's Equity Bank allies with international groups to reduce its risks when lending to smallholders or single-family farms; a Brazilian cosmetics company works with suppliers to produce sustainable packaging. Some firms also work to reach and educate lower-income consumers, sacrificing short-term profits to create future markets: a Chilean forestry company organizes local carpenters into networks and connects them to low-income customers.

One could quibble with the study. Switzerland's Phil Rosenzweig has argued that management writers are prone to a halo effect: they treat a company's temporary success as proof that It has discovered some eternal principle of good management. That some successful companies have embraced environmental sustainability does not prove that It makes companies successful. Some firms, having prospered, can afford splurging on green Initiatives; some pursue eco-Initiatives for public relations purposes.

Nonetheless, the study Is thought-provoking. Critics argue that environmentalism Is a rich-world luxury, but such fears are overblown. When natural resources are scarce and consumers are cash-strapped, sustainability can be a lucrative business strategy.

Mathematical principles of probability entail that for any future event, the probability that it will occur Is at least as great as the probability that both it and some other given event will occur. Consider, for example, the following statements that were shown to subjects in a 1998 study.

X The percentage of adolescent smokers In Texas will decrease at least 15% from current levels by September 1, 1999.

Y The cigarette tax in Texas will increase by $1.00 per pack in 1999.

Z The cigarette tax in Texas will increase by $1.00 per pack in 1999, and the percentage of adolescent smokers in Texas will decrease at least 15% from current levels by September 1, 1999.

Z("Kand X") could not have been more probable than X. Nevertheless, many of the subjects judged Zto be more probable than X. This mistaken form of reasoning, displayed with surprising frequency in various studies in addition to the 1998 study, is known as the "conjunction fallacy."

A number of researchers have offered alternative explanations for the seeming manifestations of the mistake, thus arguing that the fallacy is less widely committed than the various studies would indicate. Some have claimed that research subjects can take "probability" in a sense that does not conform to the mathematical principles of probability. Detailed descriptions of some such conceptions of "probability" have been developed under the names of "confirmation" and "support." Other researchers would claim, correctly, that subjects shown Z(" Kand X") and ^simultaneously will sometimes think of Xas involving the negation of Y—as a claim that the percentage of adolescent smokers in Texas will decrease, but without the $1.00 increase in the cigarette tax.

However, although the subjects in the 1998 study were to consider Xand Z simultaneously, the statements were presented in terms of bets rather than explicit requests for judgments of relative probability. Subjects were asked to choose between Zand X, with a chance of winning $50.00 if the chosen statement turned out to be true. Terms such as "most probable," "likely," etc., were thus avoided, and the interpretation of X\n conjunction with the negation of Kwas thereby eliminated. And with these alternative explanations eliminated, many of the subjects nonetheless bet on Zrather than X: