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Climate Change – What Do Economists Really Think?

By Jerry Taylor -- November 17, 2009

Last week I summarized the economics literature on the impact of climate change on human well-being.  Or more accurately, Richard Tol reviewed the economics literature for the Spring 2009 issue of The Journal of Economic Perspectives.  I simply told you about it and tossed in a few observations that I thought relevant.

In short, I reported that the peer-reviewed literature suggests that worries about some climate-induced Armageddon are probably misplaced.  We will likely gain or lose a year of economic growth sometime in the latter half of this century from forecasted changes in the world’s physical climate.  More than that cannot be said with much confidence.

Then, by coincidence, a study crosses my desk from the Institute for Policy Integrity at the NYU Law School.  The study, titled “Economists and Climate Change; Consensus and Open Questions,” reports the findings of a survey of 289 of those economists the institute considers to be “the world’s top economists with expertise in climate change.”  144 of those individuals returned their questionnaire.    Michael Livermore, the executive director of the institute, characterized the findings this way:

The finding that’s gotten the most attention is we asked the economists whether according to mainstream scientific views climate change posed a significant risk to the U.S. and global economies.  And 84 percent of our respondents either agreed or strongly agreed with that statement, so that’s a fairly strong consensus viewpoint that climate change poses economic risks.  That’s probably the single most attention grabbing one.  We also polled on some of the specifics of legislation or policy.  So for example, 75 percent of the economists we polled agreed that uncertainty associated with climate change, both uncertainty about what the risks are going to be in the environment and how that’s going to impact the economy, the whole range of uncertainties actually increases the value of emission controls, which is actually something that runs counter to some people’s intuition, is that they want to wait and see because of uncertainty, but actually uncertainty is a reason, in this context to act.  We also polled about whether a market-based mechanism was a good idea.  Perhaps unsurprisingly, almost all economists agreed that a market mechanism was the way to go.  And then we also asked about the role of the U.S. in the kind of global situation and 57 percent of the respondents said that the U.S. should act to control emissions even kind of regardless of what other states do, what other countries do.  And basically all economists, 90 plus, 97 percent, said that if there’s a global regime we should join it.

What should we make of this?  Again, Michael Livermore:

We should focus our resources on talking about things that we can make progress on and not worry about kind of rehashing debates that there’s already consensus on. So we shouldn’t really be arguing about whether it’s a good idea to do climate change legislation. There’s widespread agreement among scientists and our study showing among economists as well that action on climate change makes sense. This is a real risk. It makes sense to do something about it. So the question should get to some of the mechanisms to do it and kind of the stringency and so on. These are real live debates that we should focus on and do not whether it’s a good idea or not [sic]. Clearly, it is and it’s really the details that we need to be focused on, how to do it and how to work with other countries, how stringently to regulate.

Well, Mr. Livermore is welcome to his opinion.  As are the 144 economists surveyed.  But as I noted last week, the actual published work on this subject in no-kidding-around peer reviewed economics journals offers a far less persuasive case for adopting robust public policy to address climate change than Mr. Livermore’s report would suggest.  That might explain in part why the report in question offers no hint whatsoever about what these economic studies actually say … only what 144 economists think about the matter at hand.

As I also noted last week, reasonable people can disagree about the case for action based on the economics literature.  But preferences in that regard are largely personal and subjective, dictated primarily by personal willingness to pay to reduce risk and, more importantly, willingness to pay to reduce risk to (comparatively wealthier) third parties that will come along well in the future.  Those who publish in the field have no objectively “better” preferences regarding those matters than those who don’t.

I was interested to see, however, the following passage on page 3 the report:

Besides deliberation, an alternate method for identifying the consensus opinion of experts is to use surveys and find a group’s “statistical” or average answer.  Well?developed theories on “the wisdom of crowds” explain why the average answer from a group is likely to be more accurate than most individuals in that group, and why large groups do better than small groups.  For example, statistical groups of experts have been shown to significantly outperform individual experts on predicting such uncertain (and climate change?related) quantities as the annual peak rainfall runoff of various countries or changes in the U.S. economy.  By comparison, deliberating groups only tend to do about as well as their average members on making accurate predictions, and not as well as their best members.

Now that may well be … but note that this isn’t an argument for preferring surveys of opinions to published work in the academic literature; it’s an argument for preferring surveys of opinions to consensus documents like those produced by the IPCC.

That said, what are we to make of the surveys floating around out there reporting that scientists with relevant degrees on this area are far less convinced about the need to reduce greenhouse gas emissions than are the members of the IPCC?  When supporters of greenhouse gas emissions reductions are confronted with those surveys, they generally dismiss them as intellectual flotsam not worth anyone’s time.  Climatologist Michael Mann spoke for many when he told The New York Times’ Andrew Revkin that “legitimate scientific skepticism is exercised through formal scientific circles, in particular the peer review process.”  Those who opine on these matters outside of peer reviewed journals, Mann says, “are not to be trusted.”    

That may be true (or not), but it seems to me that, if people are going to plant their banner on the literature (or consensus documents), then they should live or die by the same.  Likewise, if they’re going to plant their banner on surveys of experts, they should likewise live or die by the same.  An “Institute for Policy Integrity” might be usefully employed to police intellectual consistency on these matters rather than to permit advocates to embrace or reject the literature relative to surveys or surveys relative to the literature whenever it’s rhetorically convenient.


  1. Brian Garst  

    And how exactly did they determine which economists had “expertise in climate change?” That sounds like code for “people we knew would agree with us.”


  2. Jon Boone  

    Perhaps the winner among these economists, determined by a poll of 250 members of the national media corp, should decide the most efficacious tack for doing “something” to arrest climate change. And this person’s alma mater should then play the winner of the BSC college football championship game in the match of the century to determine the Fantasy Energy League’s MVP–Most Valuable Proposal–refereed, of course, by the National Renewable Energy Lab, to ensure that reality cannot take unfair advantage.

    Is our polity now completely at the mercy of university literature departments, where faculty dissertations can really settle the question of how many angels can sit on the head of a pin? In such a post post modern world, there’s evidently a dragon in every garage.


  3. Andrew  

    I really despise the phrase “market mechanism”. There is no “using” markets in a planned economy, which is what restricting emissions entails. The idea of the government “using” markets is ridiculous. You can’t “use” spontaneous order, it serves only individual’s self interests. If it has to be directed it isn’t a market, it’s a commune.


  4. Bob Murphy  

    Jerry, interesting post, but I think you bought into the IPI summary too quickly. Yes, the surveyed economists (by a large majority) think climate change poses risks and that a “market-based mechanism” to price CO2 is the way to deal with it, but one could actually interpret the survey as being critical of the pending bills. At IER we have a post on this.


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