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Voodoo Economists, Part 3.5: Richard Tol says wildly optimistic MIT/NBER study, beloved of deniers, is “way too pessimistic”

By Joe Romm

"Voodoo Economists, Part 3.5: Richard Tol says wildly optimistic MIT/NBER study, beloved of deniers, is “way too pessimistic”"

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An amazing comment (here) from climate economist luminary Richard Tol epitomizes the narrow, linear, non-scientific thinking of the economics profession in the climate arena.

In Voodoo Economists, Part 3, I explained why a recent study, “Climate Shocks and Economic Growth, was a new favorite of global warming deniers. In projecting the economic consequences of global warming this century, the authors

  • knowingly ignored many of the key impacts (like sea level rise, extreme weather, species loss)
  • (unknowingly?) ignored all the other key impacts (like desertification and loss of the inland glaciers and ocean acidification)
  • assumed the the tiny global warming impacts we have experienced in the last few decades could be be extrapolated in a linear fashion to determine the huge global warming impacts projected for this century on the business-as-usual emissions path (see instead “Hadley Center: Catastrophic 5-7°C warming by 2100 on current emissions path“)
  • absurdly did not assign China and India “significant negative consequences of climate change” because those countries would soon be rich.

That’s the only way they could come up with conclusions like “we find very little impact of long-run climate change on world GDP” or “Changes in precipitation had no substantial effects on growth in either poor or rich countries” — conclusions the right wing deniers at the Heritage Foundation and elsewhere were quick to embrace.
But Richard Tol posted a comment here:

I read and criticised the paper…. It for sure is not an endorsement. Indeed I did tell them that their estimates are suspiciously high because their model is underspecified.

Amazed, I replied

You told them “their estimates are suspiciously high“? Are you saying you think they OVERestimated impacts? I rest my case!

Seriously, how could anybody look at their work and conclude their impact estimates were “high”? And what does “suspiciously high” mean? Is it so antithetical to mainstream economics that somebody might find, even in an an absurdly narrow analysis, “substantial negative impacts of future climate change on poor countries”?

Tol then posted:

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

Tol’s link goes to an article that ends:

The study’s breadth and emphasis on growth is welcome but the results need to be treated with caution, economist Eric Strobl of the ‰cole Polytechnique in Paris, France, told New Scientist. He points out that Olken failed to find a link between rainfall and economic growth that previous work on agriculture suggests should exist.

Richard Tol of the Economic and Social Research Institute in Dublin, Ireland, adds that poor nations often suffer from corruption, a factor that Olken’s analysis did not explicitly control for.

Kudos to Strobl for pointing out that the analysis almost certainly underestimates impacts. But Tol manages to ignore all of the obvious omissions that make the study too optimistic and finds some tangential issue the analysis did not “explicitly control for” [although, even here, unless there is an established link between warming and corruption in the economic literature, this hardly qualifies as a major omission].

It was and is my intention to discuss Tol’s work, which itself is a beloved of the right wing global warming deniers, in Part 5. But I thought this evidence of the value-subtracting contribution of economists to the global warming policy discussion was worth highlighting.

As I ended my response to Tol:

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.

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5 Responses to Voodoo Economists, Part 3.5: Richard Tol says wildly optimistic MIT/NBER study, beloved of deniers, is “way too pessimistic”

  1. Richard Tol says:

    Suffice to say that I did not write the piece in the New Scientist.

    As I understand, the results of Dell and colleagues are about growth rates. A tiny change in the average growth rate is a large effect over a century.

  2. “Pay no attention to that man behind the curtain!”

  3. Joe says:

    Richard: You didn’t write it — but you did direct everyone who reads this blog to it.

  4. jorleh says:

    Tol: It´s clear you don´t know anything about the climate change. I know, you say it´s not necessary to know anything about anything if you use mathematical models. True, economics is only to amuse oneself, a play for children.

  5. Peter Wood says:

    An interesting question that arises is are the expected costs of climate change obtained from integrated assessment models (IAMs) accurate? These slides from Michael Hanemann suggests that some of these models (including Nordhaus’ model DICE) significantly underestimate the expected costs of climate change, and not just for reasons to do with discounting or long tails in climate sensitivity.