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I think the vibes have fully shifted on climate change damage estimates. Tyler Cowen posted this morning with a terse:
He's referring to this paper and this thread about it. They perform an empirical review of previous major estimates, focusing on replicating them and analyzing the methodology. One thing I found interesting is that they distinguished between damage estimates, themselves, and applications of damage estimates, like SCC. They say that the latter have already been show to be irreducibly uncertain, though even if the damage->SCC pathway was not irreducibly uncertain, they are arguing that since the damage estimates, themselves, are irreducibly uncertain, so too would be things like SCC.
They spell out multiple factors that create identification challenges and show how small changes to the inputs of prior models can result in huge changes in the outputs, in strange and unstable ways. They don't necessarily think prior authors did anything actively bad or malicious in their approach, just that the entire endeavor is probably doomed from the start:
Their tweet thread has the typical disclaimer needed to get out in front of the typical objections one would immediately hear upon taking such a position:
I feel a bit vindicated by the vibe change, because I had been arguing something similar a full decade ago at the old old old place, pretty much on my lonesome. Obviously, I didn't have the exact set of empirical critiques that these authors present today, but I feel like it's a good example of where you can have very strong theoretical knowledge in a related/relevant area (timescale-separated dynamical systems) that leads to a correct intuition along the lines of, "I don't actually have to know the details of the methods they're using (though I did look at several back in the day); I can't imagine they could possibly accomplish what they're setting out to accomplish, just because of the nature of the type of system they're working with."
In a classic move, I'm going to side step the point and rant about Economists and their obsession with observational statistics.
Economists have an annoying tendency of making selective use of math. I empathize. Hard Sciences have the luxury of operating in closed systems. Economics relies on a representative model of the real world, and LLMs are proof that such a model takes a minimum of trillions of data points. Economists get 1 data-point every quarter, at best.
This claim can be extended to most economic studies, many of which parroted as fact.
It is annoying on 2 levels. First, the same lack of data points doesn't deter Economists from making wide claims about all sorts of other topics. If you fashion yourself a statistician, then be consistent in the weakness of your posteriors. Second, if they fashion themselves as mathematicians, then they should consider studying a sub-field outside of Bayesian statistics for once.
I get what the authors are saying, but there are other methods for causally linking the economic impacts of climate change. Climate change when defined as 'increase in average worldwide temperatures, and increase in local temperature swings', is real. There is statistical consensus on that claim.
Higher temperatures increase world wide energy demand. For the first time, northern temperate areas need to purchase air-conditioners, ie. increased spending without productivity gains. The increased heat in tropics makes afternoon work nigh-impossible reducing productive labor hours. These increases are causally linked to economic harms. The magnitude & scaling characteristics of said harm need to be computed, but the direction of harm is obvious.
Increasing climate uncertainty affects farm yields. It increases insurance costs for everyone in the food supply-chain, with zero productivity gains. Increasing flood likelihood in places like Miami is making them impossible to insure. That's causal. Bleaching of corals is causally linked to rising ocean temperatures which is causally linked to diving related tourism in South East Asia. I could keep going.
There are causal economic opportunities too. The opening of year round Arctic trade-routes and the availability of somewhat fertile southern-Siberian lands should help increase GDP in Russia and Kazakhastan.
The authors correctly point out that nations are often going through events that are more disruptive than climate change (economic liberalization in India, Genocides in Africa). These events overwhelm the measurable impact on economics due to climate change. But of course. That's trivially correct. Trying to use observational studies on chaotic systems was always a fools errand. Like trying to tighten a bolt with a screwdriver.
There are direct and causal economic impacts of climate change. We can disagree on the extent and what regions would be worst affected. We can disagree on whether disproportionate impact on the tropics due to disproportionate consumption from temperate zones warrants a disproportionate burden towards energy transition. We can disagree on whether these impacts will bear out over the new few years, decades, or generations. But there will be an impact, that's for sure.
Trillion dollar economic decisions are routinely made in presence of little evidence. At a national level, most economic experiments have trillion dollar implications and they have a spotty track record at best. After all, Communism was a world wide economic experiment that lasted generations.
Climate change driven economic policies are comparatively conservative. The transition to renewable energy & full-electrification in appliances was inevitable. Funding the infrastructure build-out for renewables & large-scale electrification made sense even if climate change wasn't real. Energy independence & decreasing reliance on exhaustible resources were worthwhile goals in-and-of-themselves.
Personally, as much as left-elite institutions have hand wrung (virtue signaled?) about climate change for decades, their actions haven't matched the urgency of their speech. Even at the peak of their powers, there was limited action towards combating climate change. If a vibe change leads to a further reduced action on that front, then we may undershoot the infrastructure build out needed to combat even the conservative estimates of climate change related economic impact.
I am not ranting at the authors specifically. The paper is solid and the conclusions are correct. I just wish economists didn't treat observational statistics and RCTs as the only means for establishing truth.
I'm partly responding to the self-congratulatory tone of climate-change-"skeptics" in the linked MR thread's comment sections. They will read 'no evidence = not happening'. I should know better than engage with this real but distant straw-man. But, alas.
Economists definitely get more than one data point a quarter. I think you’re handwaving away a whole field without good reason.
I exaggerated for effect, but the point still stands.
Economics is useful. They are generally correct that "If someone affects GDP, then it is significant". On the internet, I observe a hubris driven undercurrent of (pop?)-economists who believe the inverse as well : "A thing isn't real until is shows up in GDP numbers".
Much like X-ray machines, economics is useful. But the MRI and ultrasound machines exist for a reason. (My recent shoulder dislocation causally affects my analogies, that's for sure)
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