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What Do Economists Know About Climate Change?

By June 10, 2008

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John Whitehead hits out of the park with this post:
My concern is that economists should have nothing to say about his first two concerns:
  • Economists who think climate change isn't happening? Based on what professional knowledge? Your ability to teach ECO 760: Advanced Micro?
  • Economists who think climate change isn't manmade? Based on your extensive ecological and geological fieldwork?
Forgive me for my snide rhetorical questions. My view is that economists, as part of their professional role, have absolutely nothing to say about the first two concerns. Economists should take estimates of temperature rise, sea-level rise and etc. (and their uncertainties) and plug them into economic models and determine the costs and benefits of mitigation.
The only thing I can see.. absolutely the only thing I can see economists being able to add to the "Is climate change happening? Is it manmade? How bad will it be?" debate is our personal experiences with large scale computer models with hundreds of variables. Fortunately I am young enough to have missed 1970s-style macroeconometrics, but I believe it is fair to say that our attempts to create large-scale computer models of the economy ended largely in failure. So I can understand economists being somewhat skeptical of the results of climate change models on those grounds.

But the vast majority of economists are not also physicists or meterologists nor do we have any background in ecology. We have absolutely nothing to add to the discussion that sets us apart from lawyers or doctors or Starbucks baristas. We do the profession a great disservice when we try to pass ourselves off as experts in a field we know nothing about. There are enough people out there who believe economists are just a bunch of apologists for conservative political causes (or worse, apologists for Augusto Pinochet) pretending to be scientists.

Comments

June 11, 2008 at 12:16 am
(1) Ryan says:

Ok fair enough. Some economists do stretch their role beyond what is reasonably acceptable on the climate debate.

That said, I would argue that the vast majority of comments from economists (at least among those that I’ve read) have been far more valuable and intelligible than the statements of politicians and U.N. bureaucrats. The politicians have much to gain from purporting to “do something about the climate crisis” whether or not the crisis aspect of it is real or imagined. Economists on the other hand have little to gain by towing the popular political line.

June 11, 2008 at 12:18 am
(2) Ryan says:

Rather…”Economists have little to gain by going against the politically popular line.

June 11, 2008 at 8:30 am
(3) Garth Brazelton says:

I’ve never bought into the whole “profession X isn’t about concern Y, therefore professional X should have nothing to say about the concern.”

To me the entire notion that an economomist, or for that matter a psychologist, or a mail carrier can have no say on climate change just because their main schooling or profession was/is in a different field, does not mean that that person is not educated about climate change. I happen to love movies, have taken a few cinema classes, and am fairly knowlegeable about them. Should I not be allowed to express my informed and educated opinion on the subject just because my background is economics?

To me it’s vital that economics and economics education be expanded to include knowlege about things like climate change and psychology and sociology or else economics will be doomed to be mired in mathematical drivel for math’s sake.

To me, if an economist is educated on the subject and, as far as a publication is involved, can cite their references, then I fail to see the problem.

June 11, 2008 at 9:31 am
(4) economics says:

“That said, I would argue that the vast majority of comments from economists (at least among those that Ive read) have been far more valuable and intelligible than the statements of politicians and U.N. bureaucrats.”

I can’t argue with you there… though I would hope the profession sets higher standards than being more intelligible than politicians!

June 11, 2008 at 9:36 am
(5) economics says:

To me the entire notion that an economomist, or for that matter a psychologist, or a mail carrier can have no say on climate change just because their main schooling or profession was/is in a different field, does not mean that that person is not educated about climate change. I happen to love movies, have taken a few cinema classes, and am fairly knowlegeable about them. Should I not be allowed to express my informed and educated opinion on the subject just because my background is economics?”

Fair enough. Of course economists can leave their opinions on the matter. But their opinions should carry no more weight than informed lawyers or doctors or Starbucks baristas.

The danger (in my view) comes from when we try to pass ourselves off as experts on the field, as people who have dedicated their lives to researching the field, rather than just being smart people who read Nature religiously every month.

June 11, 2008 at 9:58 am
(6) Garth Brazelton says:

“The danger (in my view) comes from when we try to pass ourselves off as experts on the field, as people who have dedicated their lives to researching the field, rather than just being smart people who read Nature religiously every month.”

Is it not possible for a trained economist to be dedicated to researching and understanding more than just a particular subfield in economics? I think there are degrees of “expert” knowlege. Yes there are baristas with a passing interest in climate change, but I’m sure there are a number of economists with more than just a passing interest in it – who relative to the barista might be considered an expert. I don’t see why a person can’t be extremely knowlegable about a particular field in economics, AND something else. And really, the onus should be on the listener/reader to determine the value of a stated opinion or research. As long as the economist is upfront in saying he’s not a climate scientist by trade, I still don’t see the problem. And that doesn’t mean the economist can’t add to the discussion. If we only ever listened to the handful of select experts in our own field of economics, we never would have had the kinds of breakthroughs in behavioral economics that we’ve had (I’m thinking pyschologists that had more than just a passing interest in economics that made major contributions to econ).

June 11, 2008 at 10:02 am
(7) Garth Brazelton says:

I will agree on one major point and that is that I think certain economists fancy themselves politicians and policy makers far too often. I think some economists use their positions of power to apply narrow econ tools to broad social problems – at our own peril.

June 12, 2008 at 2:18 pm
(8) Satyesh Chakraborty says:

Let the economist compute the cost of mitigation of the harmful effects of global warming — they are not properly educated to anticipate global warming, not even read the changes in global climate

June 12, 2008 at 6:43 pm
(9) Don Gallup says:

If I am researching, say, a legal matter, I want my sources to have legal experience and knowledge. A plumber may be an authority on the subject, but how am I to know that? I’ll stick with my method of accepting only recognized authority. And recognized sponsors. I chose not to depend on sponsors who have an interest in the outcome.

June 12, 2008 at 8:53 pm
(10) bob says:

Perhaps you’d agree that economists are more aware of discounting than many others. So they might be able to raise the level discussion of the most appropriate discount rate to use in calculating the present value of sundry future cataclysms (real or imagined). Moreover they might have as good an idea as others as to just how rich future generations might be and just what sort of burdens they will likely be able to bear.
(it often amuses me that on the one hand many people feel a moral right to take from the present rich to give to the present poor but don’t feel the same right to take from the future rich to give to the present poor)

June 13, 2008 at 12:32 am
(11) Sandeep says:

I think we should do one introspection of understanding with the series of happenings in the World…..Climate change is a byproduct of ecnomic change and development which is much predicted and endorsed by the economists throughout the world!!!Instead of sitting back and follow the policy of wait and watch, an economicts can contribute to this topic by studying the different aspects of economic change and development and how it might have fuelled the race of consumerisms and industrialisation which consequently has led to the change in climate, global warming and all.

June 13, 2008 at 6:41 am
(12) Basil Hans says:

Positive Economics/Normative Economics – Economists have a role in ecological issues. Isn’t it?

June 14, 2008 at 10:32 am
(13) Matt says:

Economists measure the elasticity of fossil fuel demand, the main determinant variable in GHG models. The by estimating the trajectory of that elasticity under future constraints, the economists can generate a usage curve, over time, and that is the main input to a climate model.

June 14, 2008 at 10:53 am
(14) robertdfeinman says:

There are, of course, economists (and bootblacks) that express opinions outside of their area of expertise. That’s not the problem.

The problem arises when these opinions are incorporated into policy because they coincide with the aims of the politicians adopting them. In addition there are many people who pretend to have economic expertise who are just shills, many of them appear regularly in the opinion magazines and talking head shows. “I’m not an economist – I just play one on TV.”

Even this isn’t the most serious problem. The worst is when economists make predictions about the future based upon models of their own devising and these become the basis for policy. A perfect example is the Stern report of last year which attempted to calculated the economic cost of not curbing GHG’s at a certain rate immediately.

The report has become mired in debates about his model and assumptions and as a consequence nothing major is being done.

Sometimes choices have to be made with imperfect information and other criteria used instead. This is one of those cases. If the world is too cautious now and the worst happens was doing little the right choice? If, instead doing little now turns out to have been OK because of some unforeseen scientific breakthrough then the present sacrifices will have been an unnecessary expense.

There is no correct answer. There is only a philosophical one.

Are you the kind of person who buys health insurance or are you the kind of person who wishes to gamble since you are in good health now?

The choice over the planet is complicated by the fact that those choosing risk now won’t be the ones who suffer if they turn out to have been wrong. They’ll all be dead 100 years from now.

The grasshopper or the ant? Cautious and prudent or live for today?

June 17, 2008 at 5:38 pm
(15) Economics says:

Garth wrote:

“I will agree on one major point and that is that I think certain economists fancy themselves politicians and policy makers far too often. I think some economists use their positions of power to apply narrow econ tools to broad social problems – at our own peril.”

That is more at what I was getting it. I wasn’t trying to suggest that cross-field collaborative research isn’t valuable (it is!) or that people can’t be experts in multiple things. Rather I was suggesting that economists do the profession a great deal of harm when they spout off about every subject under the sun.

“And really, the onus should be on the listener/reader to determine the value of a stated opinion or research.”

I absolutely agree. This is what I am worried about – that listeners will make the correct inference, but then tar the entire field with the same brush.

June 17, 2008 at 5:39 pm
(16) economics says:

Bob: “Perhaps youd agree that economists are more aware of discounting than many others. So they might be able to raise the level discussion of the most appropriate discount rate to use in calculating the present value of sundry future cataclysms (real or imagined). Moreover they might have as good an idea as others as to just how rich future generations might be and just what sort of burdens they will likely be able to bear.”

Hi Bob,

Absolutely. We have a great deal to provide when it comes to the estimating the cost of climate change, the cost of various proposals to do something about it (including nothing). We can also provide a great deal of insight to the use of discount rates.

It’s when economists start talking about physical changes (or the likelihood of) I starte to cringe.. unless it’s obvious that they’ve also have training in that area as well.

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