Voodoo Economists, Part 3: MIT and NBER (and Tol and Nordhaus) — the right wing deniers love your work. Ask yourself “why?”

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"Voodoo Economists, Part 3: MIT and NBER (and Tol and Nordhaus) — the right wing deniers love your work. Ask yourself “why?”"

Study Shows Global Warming Will Not Hurt U.S. Economy” — That’s the Heritage Foundation touting a new study by economists from MIT and the National Bureau of Economic Review (NBER).

This study, “Climate Shocks and Economic Growth: Evidence from the Last Half Century” — wildly mistitled and deeply flawed, as we will see — is yet another value-subtracting contribution by the economics profession to climate policy (see Part 2: Robert Mendelsohn says global warming is “a good thing for Canada”).

What makes the paper especially noteworthy, however, is not merely the credentials of the authors, but that they thank such climate economist luminaries as William Nordhaus and Richard Tol for “helpful comments and suggestions.” The only helpful comment and suggestion I can think of for this paper is “Burn the damn thing and start over from scratch.”

Heritage quotes the study:

Our main results show large, negative effects of higher temperatures on growth, but only in poor countries. In poorer countries, we estimate that a 1?C rise [sic -- the Heritage folks haven't mastered the —¦ symbol] in temperature in a given year reduced economic growth in that year by about 1.1 percentage points. In rich countries, changes in temperature had no discernable effect on growth. Changes in precipitation had no substantial effects on growth in either poor or rich countries. We find broadly consistent results across a wide range of alternative specifications.

Heritage then quotes a commentary on the study by right-wing blogger for U.S. News & World Report James Pethokoukis, “Sorry, Climate Change Wouldn’t Hurt America’s Economy.” Pethokoukis also quotes from the study:

Despite these large, negative effects for poor countries, we find very little impact of long-run climate change on world GDP. This result follows from (a) the absence of estimated temperature effects in rich countries and (b) the fact that rich countries make up the bulk of world GDP. Moreover, if rich countries continue to grow at historical rates, their share of world GDP becomes more pronounced by 2099, so even a total collapse of output in poor countries has a relatively small impact on total world output.

[If these excerpts suggest to you that the study authors and the economist commenters are victims of some sort of collective mass hysteria, then you are a getting (a little) ahead of me ... but the fact that thoroughly-debunked denier Ross McKitrick is a commenter on this paper certainly suggests this entire effort is indefensible.]

Pethokoukis himself then offers a conclusion that, though amazing, is not utterly ridiculous given a narrow misreading of this absurdly narrow, easily-misread study:

So if you do buy into the theory of man-made climate change, the next logical move would surely be to do nothing that would slow growth and technologcal advancement in rich countries — such as a cap-and-trade regulatory system or onerous carbon taxes — and do more to accelerate growth in poor ones through free trade and the exporting of democratic capitalism.

Now I am not here to defend the deniers and delayers at Heritage — you can read rebuttals of their post from NRDC (see “Heritage Foundation: Torturing Facts, Sacrificing the Poor“) and DeSmogBlog and WonkRoom (see “Paper Finds Global Warming Clobbers Third World — Heritage Looks For Silver Lining“).

I am here to slam yet another narrowly conceived and seriously flawed “study” by seemingly serious economists, who turn out to be just another bunch of Voodoo Economists aka MEOWs (Mainstream Economists who Opine on Weather): Melissa Dell of MIT (!), Benjamin F. Jones of Northwestern University and NBER, and Benjamin A. Olken of MIT (!) and NBER.

The first point is that this paper does not look at “climate shocks.” It looks at relatively small temperature rises over relatively short periods of time. Since “mean global land temperatures have risen nearly 1—¦C since 1970,” some countries have experienced bigger temperature swings during part of that time.

But we are facing a much, much, much bigger hit this century — a real climate shock where mean global land temperatures will rise more than 5°C with very high certainty and could rise close to 10°C (see Hadley Center: Catastrophic 5-7°C warming by 2100 on current emissions path).

Trying to determine what a 10°C rise in mean land temperatures — or even what a mere 5°C rise — would do to us based on a study of what a 1°C warming has done to different countries is just plain non-scientific and irrelevant. It would be like trying to figure out what a 5°C rise in mean body temperatures would do to us by studying what 1°C warming has done to different people.

Economists just can’t seem to get their head around the fact that on our business as usual emissions path, we are facing a huge non-linear change in the global climate. The biggest impacts we face are simply beyond that which humanity has experienced in recent decades or centuries or even millenia (see, for instance, “Must have PPT #1: The narrow temperature window that gave us modern human civilization” or “Humans boosting CO2 14,000 times faster than nature, overwhelming slow negative feedbacks“).

The MEOWs gamely (or lamely) write:

The warming trend since the 1970s is well-documented (e.g. Brohan et al. 2006) and suggests a linear rate of change that, should it continue, would predict an additional 3—¦C warming by 2100, in line with many climate models.

This is absurdly misleading. Any nonlinear change looks linear to start with. Have the authors not even bothered to read any of the IPCC reports? The science is quite clear that on the business as usual emissions path, the rate of warming accelerates.

The rate of growth of atmospheric concentrations of CO2 this decade is 40% higher than in the 1990s (see “Global carbon emissions jumped 3% in 2007“). Global temperature rise this decade already appears to be considerably higher than in the 1990s (see “Very warm 2008 makes this the hottest decade in recorded history by far“).

By 2100, we are facing 5 feet of sea level rise and the rate of sea level rise may be 10 inches a decade (ultimately rising to 20 inches a decade), which could last for centuries until we are a completely ice-free planet and sea levels are 250 feet higher. We are facing desertification over one third of the planet. We may kill off 70% of the species and turn the ocean into one large, hot, acidic dead zone.

But all the voodoo economist of MIT and NBER can muster is a footnote on page 3:

In the context of future global climate change, other factors such as changing sea levels, increasing frequency of natural disasters, and issues of biodiversity may create additional costs not captured here.

Ya think?

No wonders the deniers love these folks. No wonder the MEOWs come up with idiotic conclusions like the one’s quoted by Heritage and Pethokoukis.

Here’s more evidence of the voodoo these economist do so well, buried in yet another bombshell footnote:

Note that the rapid growth of India and China suggest that they will quickly cross the ‘rich country’ threshold, and therefore in the projections they are not assigned significant negative consequences of climate change.

Yeah, China and India will do just fine when large parts of their country turn to desert, other parts get hit over and over again by record flooding, the inland glaciers disappear eliminating the year-round reservoir for many of their major rivers, the ocean turns into a dead zone, and rising sea levels wipe out their coasts and flood their country with environmental refugees.

But in the model of economists Melissa Dell and Benjamin F. Jones and Benjamin A. Olken, since India and China will soon be rich, “in the projections they are not assigned significant negative consequences of climate change.”

Seriously, you can’t make this stuff up. Well, you can’t. But apparently credentialed economists can.

To all those who think my previous posts have unjustifiably tarred the entire economics profession with the criminal ignorance of a few, I offer this paper — and its commenters — as prima facie proof I have not (and I haven’t even gotten to Parts 4 or 5 yet). Consider the study’s acknowledgment:

We thank Daron Acemoglu, Esther Duflo, Douglas Gollin, Michael Greenstone, Jonathan Gruber, Seema Jayachandran, Charles Jones, Peter Klenow, Ross McKitrick, William Nordhaus, Elias Papaioannou, Richard Tol, Carl Wunsch and numerous seminar participants for helpful comments and suggestions

Please tell me how any serious person, economist or not (as in the case of Dr. Wunsch) could possibly see this work and not

  1. Rip it to shreds
  2. Demand that their name not appear in the acknowledgments without massive changes.

The paper should be an embarrassment to the economic community not one boasting such a stellar list of people who provided helpful comments and suggestions.

I have wasted far too much time dismantling this nonsense, and yet it is impossible to pass by the name “Ross McKitrick” in the acknowledgments. No serious climate scientist would ever have his name associated with their paper. McKitrick is a well-debunked global warming denier. He has said:

The present state of the climate reflects primarily natural causes, and if infrared-absorption plays a role it seems very minor. Continued use of fossil fuels following any reasonable trajectory, by adding CO2 to the air, may at most cause small and barely noticeable changes to the future climate. These changes will be impossible to detect in any location, but on balance they will probably be beneficial.

Well, at least that last sentence sounds vaguely economist-like: Robert Mendelsohn says global warming is “a good thing for Canada.” McKitrick’s work has been well debunked. Here is just the debunking on Realclimate:

There is no excuse for McKitrick being associated with this paper in any respect, although it does have the benefit of unintentionally discrediting it.

But really, there is no excuse for this paper. Shame on the authors. Shame on those whose name appear in acknowledgments. Shame on the whole profession for putting up with such nonsense.

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23 Responses to Voodoo Economists, Part 3: MIT and NBER (and Tol and Nordhaus) — the right wing deniers love your work. Ask yourself “why?”

  1. paulm says:

    Were moving in to the next phase of the battle!

  2. P. G. Dudda says:

    1. “…even a total collapse of output in poor countries has a relatively small impact on total world output.”

    Except that two of those poor countries are home to one-third of the entire human species: India and China. But wait, they get around that with:

    2. “Note that the rapid growth of India and China suggest that they will quickly cross the ‘rich country’ threshold, and therefore in the projections they are not assigned significant negative consequences of climate change.”

    Ah, lovely circular reasoning! “They’re going to be rich, so therefore they won’t be affected, because they’ll be rich!” *rolls eyes*

    Idiots.

  3. concerned says:

    The abstract of this paper reads “We find three primary results. First, higher temperatures substantially reduce economic growth in poor countries. Second, higher temperatures appear to reduce growth rates, not just the level of output. Third, higher temperatures have wide-ranging effects, reducing agricultural and industrial output, investment, innovation, and political stability.”

    The conclusion of the paper is that climate change is bad on all counts. I can see why you might want to quibble with methods or point out flaws in reasoning, but why would you want to alienate economists who broadly agree with you? This makes no sense.

  4. Steve Bloom says:

    concerned, it is an unsupportable and dangerous delusion that rich countries will be unaffected. If people in rich countries believe that, they will (broad-brushing things here) respond by ignoring the problem, because concern about the fate of poor countries and fifty cents won’t even buy the proverbial cup of coffee. Given this, there is no “broad agreement.”

    Joe mentioned the consequences of the loss of the Tibetan-region glaciers, but let me give you another concrete example:

    Remember Cyclone Nargis? Much of the southeastern Indian coast is vulnerable to such events now, but it’s clear that under continued climate disruption such cyclones will be getting stronger (albeit probably not more frequent). Will India be rich enough to resettle many of the hundred million plus residents of that coastal zone and pay for the same for Bangladesh? I frankly find it ridiculous to imagine that.

    But of course this parsec-wide caveat–

    “In the context of future global climate change, other factors such as changing sea levels, increasing frequency of natural disasters, and issues of biodiversity may create additional costs not captured here.”

    – means that the entire exercise isn’t worth the paper it’s printed on.

  5. Steve Bloom says:

    Joe, I’d give Carl a break on this unless you can be sure he signed off on the text. That didn’t seem clear. Maybe he just participated in a seminar.

  6. jorleh says:

    Obama have some work there to do with these idiots. I have thought economists to be a harmless nuisance only. Have had good time to read the ridiculous anti-science of Lomborg. But do someone there in the U.S. take seriously this stuff, these “economists”?.

  7. Economists think that they are scientists. They are not. Science deals with NATURE, not man-made things like markets and money. Science requires and is based on public and replicable experiments. Computer simulations don’t count. Social sciences are suspect, but not as bad as economics. SCIENTIFIC EXPERIMENTS ARE NOT POSSIBLE IN ECONOMICS.

    Economics presupposes the existence of a stable civilization and the invention of money. A stable civilization with money requires creatures that are at least marginally rational and intelligent and slightly knowledgeable. A stable civilization also requires an adequate food supply. The collapse of agriculture inevitably leads to the collapse of civilization and the collapse of money and economics. Economics is unable to go outside of its founding presuppositions. Global warming climatology MUST concern itself with the collapse of civilization and the possible extinction of the supposedly rational intelligent knowledgeable creatures. Climate change is therefore impossible for economists to imagine AS LONG AS THEY REMAIN ECONOMISTS.

    Thus the problem of economists who speak on the subject of global warming. Being economists, they assume the impossible, which is that agriculture will not collapse, civilization will not collapse and Homo Sapiens will not go extinct. Being economists, they are unable to imagine anything outside of the basic presuppositions of economics. They have made those assumptions implicitly since long before their careers began. They cannot do otherwise. They are money oriented. It is a basic part of their personalities. They cannot change by themselves.

    Our project, therefore, is to make economists quit being economists prior to the collapse of civilization. It is only by taking them outside of their economic world view that they can be shown how to imagine another world, a world without economics. We have to somehow show them the limitations of the boundaries of their world. We have to shock them into the realization that their world is a very small subset of reality.

  8. Kvams says:

    Asteroid: The English ‘science’ has, since the late nineteenth century, been used in a new, weird, sense. Earlier, it meant ‘studies.’ It’s counterpart in German (wissenschaft), French (science), and all other Indo-European languages mean ‘systematic inquiry’ rather than something that deals with nature. Why the English term went off-track, I don’t know, but statements like ‘economics is not a science’ looks very weird to me (a foreigner).

    And when it comes to ‘scientific experiments,’ experimental economists are doing just that.

    ‘[A] world without economics’? Economics are about tradeoffs and decisions under uncertainty, stuff that don’t go away and don’t stop being important. Turning all economists into non-economists won’t help.

  9. Kvams says:

    I got most of that from McCloskey’s ‘The Rhetoric of Economics’ (Second Edition), p. 20, by the way.

  10. Dave says:

    Please do us all a favour and get familiar with scientific norms before you write nonsense like this. In economics it is absolutely standard to thank anyone who told you something that helped in any way to improve your paper. This does not mean that this person agreed at all in any way with what you wrote, not even that this person read your paper and most certainly that person was not asked whether he/she agrees to appear in the thank you list. A thanking B does not mean that B endorses A’s view. You presenting it exactly the other way round is deeply misleading.

    [JR: I know what the norm is. The point of that prestigious list is obviously to give the piece credibility (hence the focus on big-name people, rather than, say, everybody at the seminar). I also know that if anyone on the list seriously objected to this crap, as they should have, then they would have asked for their name to be withdrawn from the acknowledgments list. If I had been asked to review this paper or if I had been at a seminar where it had been tentatively presented, I would have made quite clear that I would not want to see my name associated with this piece. What I wrote stands.]

  11. Bob Wallace says:

    People aren’t part of nature?

    Scientific methods can’t be used to study people?

    Economics is not the study of one portion of human behavior?

    Who wrote the rule that reductionism is not a continuum but is truncated as one works their way up past biology?

    There are economics, biologists, physicists, etc. who do good research and formulate their thinking based on data.

    Then there are hacks who make stuff up.

    Can we not find climate change hacks in the lower end of science?

    Can you say “Jennifer Marohasy, Ph.D. in Biology”?

  12. Dave says:

    No, to me your point doesn’t stand. If you want to blame the list of economists that appear in the acknolwedgement, look at their work and not at the work of people that thank them.

    You are not helping your credibility with such loose associaten of blame and holding people responsible for things they never wrote or endorsed. If you seriously believe someone like Acemoglu tracks every paper where someone thanks him, get real.

    Finally, it is a social norm in econ papers to thank people even if they are highly critical of your paper. It would be entirely standard that if A wrote a paper attacking a paper by B, and B disagrees entirely with the critique of A, thinks it is all rubish and tells him so in a discussion, that A then puts a thank you in for B, in fact everything else would be considered quite rude. Except for you, people do not interpret acknowledgements in econ papers as any kind of endorsment, it is as simple as that.

  13. Joe says:

    First off, Dave, if you have any credentials on the matter, let’s hear them, rather than this semi-anonymous posting with a fake e-mail address.

    Second, I am not blaming the list of economists — and certainly not holding them responsible (where does it say that). I am primarily making my case that this piece of crap is exactly in the mainstream of economic thinking today.

    Third, I do think that for a piece of work this shoddy, so beyond irrelevant that it was is certain to be championed by the right wing, that yes, any senior figure like Tol or Nordhaus or Wunsch has every right to ask that they not be included in the acknowledgments. Like I said, the only helpful comment and suggestion would be to burn the damn thing and start from scratch.

    Fourth, note that the way the acknowledgments are written, it seems to suggest that there was some sort of seminar in which these issues were discussed and the final paper was a result. Note also that the authors did not include the customary statement that the conclusions are those of the authors alone. So this is NOT a typical set of acknowledgment but a clear effort to attempt to associate the authors with some of the more prestigious people in the field.

    Fifth, I’ll get to Tol and Nordhaus. The WHOLE POINT of this series is, again, that this crap is in the economic mainstream. I think the acknowledgments the way they are written help make my case and I stand behind what I have written.

  14. John McCormick says:

    Dave, are you inferring that economics is a science?

    It appears so. You said:

    [Please do us all a favour and get familiar with scientific norms before you write nonsense like this. In economics it is absolutely standard to thank anyone who told you something that helped in any way to improve your paper.]

    Here is a definition of the word ‘science’

    “1. the systematic observation of natural events and conditions in order to discover facts about them and to formulate laws and principles based on these facts. 2. the organized body of knowledge that is derived from such observations and that can be verified or tested by further investigation. 3. any specific branch of this general body of knowledge, such as biology, physics, geology, or astronomy.”

    Academic Press Dictionary of Science & Technology

    A scientist worthy of that title has the obligation to defend or revise a body of knowledge produced by science.

    A physician would not allow his/her name to be associated with a diagnosis if they did not concur.

    Economics does nto fit the definition of science, in my opinion. So, scientific norms do not apply in your comment.

    John McCormick

  15. ken levenson says:

    reminds me of Cheney self-dealing/reinforcing/justifying nonsense –

    to achieve greater potential we now only need Dot Earth to run an uncritical piece on the study!

  16. Richard Tol says:

    Dave is quite right. I read and criticised the paper, and so they put me in the acknowledgements. This is common practice. It is the polite thing to do and it signals to editors and referees that they did discuss their ideas with others.

    It for sure is not an endorsement. Indeed I did tell them that their estimates are suspiciously high because their model is underspecified.

    [JR: You told them "their estimates are suspiciously high"? Are you saying you think they OVERestimated impacts? I rest my case!]

  17. Peter Altman says:

    Thanks for tackling the multiple issues that are tangled up with this paper Joe. It is a major challenge to keep up with the myriad ways that those determined to deny or ignore the perils of global warming manage to misinform, misinterpret and misstate the issues. You certainly pulled it off nicely in this post.

  18. Kvams says:

    John,

    In most other languages, the word for ‘science’ means ‘systematic inquiry’ and is used for all sciences, humanities and arts. So, is it only in America and Great Britain that economics is not a science?

  19. Kvams says:

    I argue that economics is scientific and that that is what matters:
    http://kvams.wordpress.com/2009/01/15/what-is-science/

  20. Richard Tol says:

    JR: You read correctly. I think their estimates are way too pessimistic.

    See http://www.newscientist.com/article/mg20126914.000-climate-change-to-stifle-developing-nations-growth.html

    [JR: I confess to be stunned. They clearly state that they have ignored many if not most of the factors that will hurt poor countries. And to anybody who follows the scientific literature, they are completely misguided about thinking climate impacts will proceed in a linear fashion. And, of course, they just assume the two biggest developing countries, China and India, will become too rich to somehow be affected substantially by global warming.

    The scientific literature now makes crystal clear that their estimates are, if anything, way too optimistic. The economics profession simply can't draw a tiny circle around climate impacts, publish a piece of crap analysis, and have its luminaries say the flaws in the study make the results too pessimistic. That makes a mockery of the gravest threat to the health and well-being of the human race.]

  21. Jay Alt says:

    On his birthday -
    Every man must decide whether he will walk in the light of creative altruism or in the darkness of destructive selfishness. ML King, Jr.

  22. David B. Benson says:

    In priniciple economics ought to be a science. In mainstream practice, it is nothing more than alchemy; there is a resaon that academic economics is often housed in a College of Business and Economics, not a College of Arts and Sciences.

  23. chad says:

    You should point out the fact that what they’re really doing is using semantics to prove science. They cherry pick facts to fit their ideology, meaning they have reversed the normal process of the scientific method, and given a primarily semantic argument against climate change a touch of science-ness (not unlike Colbert’s truthiness). Although your science-focused deconstruction is quite thorough and authoritative as it is.