Economics and morality

Well I've done morality and economics ad infinitum, perhaps reversing things will help. This is sparked by yesterday's DICE damage functions which lead me to Costing the Earth: A Numbers Game or a Moral Imperative? by Gerard Roe; ATTP's version leads on to it more directly. Alas, it's all rather broken; let's present his abstract for starters:

It is a simple truism that public policy must be guided by an objective analysis of the physical and economic consequences of climate change. It is equally true that policy making is an inherently value-laden endeavor. While these two threads are interconnected, the relative weight given to each depends on the certainty that the technical analyses can deliver. For climate change, the envelope of uncertainty is best understood at the global scale, and there are some well known and formidable challenges to reducing it. This uncertainty must in turn be compounded with much more poorly constrained uncertainties in regional climate, climate impacts, and future economic costs. The case can be made that technical analyses have reached the point of diminishing returns. Should meaningful action on climate change await greater analytical certainty? This paper argues that policy makers should give greater weight to moral arguments, in no small part because that is where the heart of the debate really lies.

His simple truisms are of course wrong. It would be desireable for policy to be guided by objective analysis, but it rarely if ever is, so his "must" is certainly wrong. Never mind. Consider next the relative weight given to each depends on the certainty that the technical analyses can deliver. This points up one of his blind spots: his correctly realises that the technical analysis may be uncertain, but fails to realise that his moral analysis may suffer the same problem.

His next section considers the technical stuff and essentially ends "well it's all very uncertain" and so slips into the moral stuff as a substitute. But what he doesn't consider is how good the tech stuff would have to be for the moral not to matter. Suppose for example that we knew that the "damage" to 2100 would be 10% of GDP, but in the meantime GDP would grow by 5x, more than offsetting the damage. Would that remove the need to consider morality? If not, suppose the damage we only 1%? If not (and his "because that is where the heart of the debate really lies" suggests not) what he's really arguing for is morality-based regardless of the technical analysis. Which is a defensible viewpoint, but not the one he is ostensibly presenting.

Next, we're onto the morality. Actually it's pretty thin, and there's no attempt at balance. Sample:

A planet that, in several centuries' time, is hotter by 5°C or more is a very different world and, in the opinion of many, would be a dismal legacy of economic and human progress that would also engender a hideous disruption to other life on Earth. Powerful emotions recoil against the prospect of bequeathing such a world to our descendants, but economic arguments that factor in conventional long-term growth rates are blind to such feelings. Through the lens of future generations, one can easily imagine that their increased consumption will not be the only measure by which they judge us.

Which is all rather one sided: oh noes, we're ruining the beautiful world. And certainly, significant warming will change the world (and already is, in some ways I regret). But how does your "morality"- love of beautiful things, love of polar bears (yes, he does explicitly throw in "Granddad, what is a polar bear?" despite the obvious fact that they will definitely continue to exist in zoos in the unlikely event of them going extinct in the wild) match up against billions of Chinese, Indian and African peasants rising out of poverty? I don't see Roe considering that; such considerations apparently belong to the "blind" and unfeeling world of economics. Unless his "Of course, arguments that have the opposite moral complexion can also be readily constructed, and they should be" is intended to provide the opposing arguments; but that's it; you can tell his heart isn't in it.

How did the AMS come to publish such a one-sided and ill-thought-out article? Probably because they have the same blind spot as Roe.

Refs

* That it is easier to agree on economics than morality
* Apologie des sorcières modernes by Pierre Lemieux

DICE damage functions

Once again the question of the "standard" IAM results showing let us say entirely containable GDP damage estimates for GW up to let us say 2100^{1, 4} comes up. For example,

If the economic impact of climate change (by ~2100) has a good chance of being ~10% of GDP with economic growth continuing at 2-3% per year, then why is there so much worry about climate change? Is it 1. We shouldn't be concerned, because this really does properly reflect the overall impact? 2. This properly reflects the economic impact, but misses other substantive impacts that can't be quantified. 3. Simply doesn't make sense if we're heading for > 4C. 4. Something else?

First, is the premise of the question true: does the econ impact have a "good" (whatever that means) chance of being ~10% (and note that means a 10% decrease for GW-related reasons over an otherwise large increase, by a factor of perhaps 5)? I don't know. Expressed in hand-waving terms as my personal uncertainty, which I think reflects the state of expert knowledge to some degree, then I don't think I'd be confident of excluding damage less than 10%, but I wouldn't be confident of excluding "catastrophic" damage either.

But really, I didn't want to talk about that, I wanted to talk about IAMs damage functions², in particular DICE's, since DICE is pretty well known. When faced with a damage function that doesn't predict enough damage, people tend to say things like "because it's pants-off ludicrous to estimate the economic & societal impacts of global temperature change using present-day GDP differences as a function of regional temperature"³. This is, of course, not a coherent argument. But AA interjected with Playing DICE with Life on Earth: Nordhaus’s Damage Function; by Prof Steve Keen, which is a coherent argument; whether it is right or convincing or not I shall now proceed to consider.

It doesn't start well, going on about "completely failed to anticipate the 2008 Global Financial Crisis", which makes as much sense as complaining that GCMs fail to predict individual ENSOs. But I think the author merely wants a dig against "neoclassical" economics to demonstrate his credentials. Onwards, to the damage function; he quotes Nordhaus: "Including all factors, the final estimate is that the damages are 2.1% of global income at a 3 °C warming, and 8.5% of income at a 6 °C warming" and notes - as my lead-in quote from ATTP also noted - that if that's true, then what are we worried about?

SK's first go is: Except those in New York... and numerous other coastal cities... 6 degrees is well above the threshold at which all of Greenland and the Antarctic will melt completely... That will take much more than a century of course, but a planetary temperature rise of 6 degrees will doom any city less than 70 metres above sea level. They will all have to be relocated and rebuilt. Which may well be true, but is a fail, because it goes beyond 2100. Next? a 6 degree increase in temperature will make many [near-equator cities] unliveable. The obvious suspects—the Middle East and Northern Africa—would see average summer temperatures of over 40 degrees in their major cities, and much of their countryside. Moving them, or emigrating from them, would be essential for survival. But is this true? Not obviously; you could air condition them. Using power from the giant solar arrays built in the desert. Or something. And I'm not sure that moving a whole pile of such cities would even be 10% of global GDP. SK decides on this basis that DICE-type damage numbers fail "the smell test" but a sense of smell is a very personal thing. Then we have the obligatory mention of tipping points, or tipping elements for the cognoscenti, but as so often the discussion doesn't really go anywhere, because other than "we can't rule out the existence of tipping points" there isn't very much to say.

So overall, as an attempt to dent DICE, it's not very convincing sez oi. Call for... Marty-Man!

Weitzman Sez

Another attempted answer was the sainted but dismal Weitzman. There were two offerings: ON MODELING AND INTERPRETING THE ECONOMICS OF CATASTROPHIC CLIMATE CHANGE - perhaps a bit shouty - and Reactions to the Nordhaus Critique.

In the second, W tries to make a heuristic-empirical case for there being big structural uncertainties in the economics of extreme climate change. I have no objections to that, indeed I'd be inclined to agree, but of course uncertainty isn't a definite answer. With mt and many others I would argue that uncertainty isn't your friend, but in terms of ATTP's lead-in, it also isn't a good answer in general discourse. What I'm really looking for are strong arguments that the existing damage function is wrong: not lots of examples of other functions you could fit, or reasons why the fit is uncertain. W is an economist not a climatologist, so some of his stuff around here is distinctly dodgy, including his assertion that carbon-cycle feedbacks are largely ignored in the std analysis. W's conclusion is that the economics of climate change consists of a very long chain of tenuous inferences fraught with big uncertainties in every link, which may well be true but doesn't actually offer any positive support for non-standard assumptions.

In the first (I skimmed it) it looks like he's doing "fat tails" again, which gets very much the same response. See-also God's Own view of dismality.

Is that 500 words yet? Can I stop now? It's nearly 10 pm.

Update: there's Climate Impacts on Economic Growth as Drivers of Uncertainty in the Social Cost of Carbon by Elisabeth J. Moyer et al., 2013. And there's The Economic Impacts of Climate Change by Richard Tol. Moyer wants more damage from damages affecting growth; Tol acknowledges this could be an affect but finds no evidence in favour. I do not arbitrate between them.

Notes

1. I don't think it's worth spending much time looking beyond 2100. And happily, ATTP's Twit was phrased to 2100 too.

2. And not about the other biggie, discount rates.

3. Note: Twatter's threading is utterly shite, or I'm just bad at using it, so if I've got any of these call-and-responses out of order, I blame Twatter, and anyone dumb enough to attempt to have a coherent argument there.

4. 2023/06: ATTP has Criticism of economic models which is mostly weirdly off the ball, but does ref Hansel et al., which tweaks things a bit to Re-mould it nearer to the Heart's Desire! That appears to stuff all those who say "DICE must be wrong and so must the entire methodology because it gives obviously wrong results".

Refs

* Estimates of the economic impact of climate change - ATTP
* Thompson, Erica L.; Smith, Leonard A: working paper: Escape from model-land

* [2021] Economic damages from on-going climate change imply deeper near-term emission cuts Anselm Schultes et al.

* 2022/01: Graun Climate crisis could wipe 1% a year off UK economy by 2045, say ministers. But 1% over 23 years is pretty cheap...

* Neoclassical tipping points of no return.

Economists greatly underestimate the price tag on harsher weather and higher seas. Why is that?

Or, Opinion: Climate Change Will Cost Us Even More Than We Think, by Naomi Oreskes and Nicholas Stern in the NYT. NO's involvement is unpromising, but vaguely sane people twote it, so let's read on. But before I do, some more snark: the NYT op-ed says it is "explained in a recent report by scientists and economists"; naturally, Stern being a shy retiring fellow modestly doesn't mention that he is one of the authors of the said report.

The first thing to do is to search for the word "discount", because as we know, that's most of it. It says in the summary:

Economic assessments that are expressed solely in terms of effects on output (e.g.
gross domestic product), or that only extrapolate from past experience, or that
use inappropriate discounting, do not provide a clear indication of the potential
risks to lives and livelihoods.

But don't get too excited: that was my bold, and it's three quarters of the way down the summary. It also rather delicately doesn't discuss what "inappropriate" might be - something that Stern doesn't like, perhaps. Very similar text appears lower down in the "Why the risks have been missed, omitted or unquantified" section, but again there's no discussion; it's treated as given that the weight of economic opinion is wrong (actually, not even that; if you read just the report you'd get the impression that people are mysteriously using "inappropriate" discount rates for apparently no reason at all), and the report's authors are so trivially correct that they don't need to explain why. This is a pattern for Stern.

Otherwise, we're underestimating the costs because

Economic assessments of the potential future risks of climate change have been omitting or grossly underestimating many of the most serious consequences for lives and livelihoods because these risks are difficult to quantify precisely and lie outside of human experience...

• Destabilisation of ice sheets and glaciers and consequent sea level rise
• Stronger tropical cyclones
• Extreme heat impacts
• More frequent and intense floods and droughts
• Disruptions to oceanic and atmospheric circulation
• Destruction of biodiversity and collapse of ecosystems

But most of those are included. There's a section in the report for each. The tropical cyclones one, for example, tells us that TCs will get bigger blah blah but we know that already; there's nothing omitted there; what the section rather pointedly fails to include is any analysis showing why or how this effect is omitted from damage estimates. Ward, also an author on the report, has form in this area too. RP Jr also notes that Greenland ice sheet SLR has not been missed.

Extreme heat impacts is much the same. This isn't omitted from damage estimates  (e.g. 4th National Climate Assessment report: Labour).

Risks

However, I have a lot of sympathy with:

The biggest risks from climate change are associated with consequences that are unprecedented in human history and cannot simply be extrapolated from the recent past. As such they are uncertain and difficult for scientists to quantify in physical terms. Furthermore, the resulting consequences for lives and livelihoods can be difficult to determine because they involve assumptions about the resilience of populations, their capacity for adaptation and their ability to move in a crowded world. The cascading risks that can result from these impacts can be difficult to predict precisely and to capture in simulations using current models. These uncertainties mean that the impacts are difficult to represent in terms of costs and benefits and are therefore often ignored or omitted from economic models.

Although I'm doubtful that "omitted" is correct. But, there's nothing new there: this is the well know uncertainty-is-not-your-friend problem. What does the report add to the sum of human knowledge?

Runaway tipping elements of no return

(update) Ah, I missed out the "tipping points" stuff; or "tipping elements" (or was that only briefly fashionable?). From the NYT:

In economic assessments of climate change, some of the largest factors, like thresholds in the climate system, when a tiny change could tip the system catastrophically, and possible limits to the human capacity to adapt, are omitted for this reason. In effect, economists have assigned them a value of zero, when the risks are decidedly not. One example from the report: The melting of Himalayan glaciers and snow will both flood and profoundly affect the water supply of communities in which hundreds of millions of people live, yet this is absent from most economic assessments.

But again, Stern has run off the rails. Glacial melt is a real effect, and quite likely a real problem, but it isn't really a tipping point problem. There's an albedo feedback effect, but that's different (well, that leads towards the entire difficult discussion of whehter the tipping points stuff means anything much).

Refs

* Societal tipping points - ATTP. There's a semi-good-point: [Economists] approach climate damages as minor perturbations around an underlying path of economic growth... Hence, this type of analysis cannot even address the question of whether or not there might be societal tipping points; it assumes, by definition, that there aren’t any. the problem is that this idea doesn't go anywhere other than "we should think about it".
* The Biggest Threat To Climate Science Comes From Climate Advocates - Roger Pielke, Forbes.
* Consistency & freedom - Don Boudreaux
* Climate Chickenhawks

* Duflo and Banerjee's Deficient Thinking on Incentives, Part I by David Henderson

We, in Some Strange Power's Employ, Move on a Rigorous Line

Aka Amsterdam Man again; aka 3:57:43 (GPS trace).

Here as an update for my records is all my marathons, in order:

Rotterdam 2018: 4:25:39
Brighton 2011: 4:20:29
Rotterdam 2016: 4:16:51
Rotterdam 2019: 4:01:49
Amsterdam 2016: 4:00:08
Amsterdam 2014: 3:58:00
Amsterdam 2019: 3:57:43
Amsterdam 2011: 3:57:23
Rotterdam 2015: 3:55:54
Amsterdam 2012: 3:55:52
Brighton 2012: 3:54:28
Manchester 2017: 3:51:46
Brighton 2013: 3:46:32
Brighton 2014: 3:43:42
Amsterdam 2013: 3:43:06.

For unclear reasons those records show that Rotterdam is unlucky for me. For this race I'd done minimal training - only one half since the spring - and my chief aim was to get round the course, ideally in under four hours, without breaking myself. This happened so I'm happy.

In the large the course was similar to previous years - start and finish at the old Olympic stadium, wiggle through town a bit, go out and back on the river for a long bit; then back through newish bits in the SE, and then back through the Vondelpark. But different in detail; I don't think I went out through the Vondelpark last time. The river bit is nice running and burns off a pile of distance, 21 k comes not long after the turn. The only annoying thing was that towards the end of the first k from the start we all lost about half a minute - it felt like more - when a constriction in the route forced a blockage and we had to walk for a bit until past. That's the sort of thing the organisers should be able to foresee and prevent.

My cunning plan was to run 5:40 mins/km average, which is just-sub-4-hours, as 5:25 for the first half to gain a small cushion, and then fade towards 6-ish for the second half. This was because my usual plan of running too quickly was out, since I'd (a) done hardly any training since Rotterdam in the spring; and (b) my inclined-to-tear left calf was still a bit dodgy; and (c) my right knee was complaining a bit, possibly because I'd gone over a barrier in the dark on my cycle home a few weeks before. Anyway, for a miracle this all worked, although slightly upset by the loss of 30 seconds at the start: by 21.1 I was on 1:55; the 5:25 held to 26 k and beyond (if you ignore the +20 s at 26 k when I stopped for a wee). By 30 k the fade to 5:45 has become rather obvious but by that point my cushion has grown a bit and I can afford 6:00 for the rest, which may be possible. There was a certain amount of internal dialogue around the 32 k point where I tried to decide if I cared enough to keep to the pace, but fortunately my body came to the rescue of my weakling mind and proceeded to stay under 6 mostly, so all was well.

For the last 8 k I had a carefully calculated 1 minute margin, including the extra 0.2 above 42 k, and the extra 0.15 for the disparity between my watch distance and the official markers. Towards the last 2 k I was able to push on a little (my wife, daughter and brother in law were waiting to cheer at 1.5 to go, at the exit of the Vondelpark, and saw the slightly sprightlier version of me) and so pulled in another minute of margin, woot. Afterwards I was about as fine as you can be after a marathon, walked slowly out via medal and banana and water and energy drink, hopped over the barrier skipping baggage reclaim, and walked slowly back to Hoofdweg.

Misc notes:

* the water stations are about every 5 km, and supply in order energy drink, water, sponges early on; with gels and pre-cut bananas later. I took 7 gels of my own and the water and sponges en route. The water in cups is more eco-friendly than bottles which are wasteful; I jogged through the first few then walked ~10 m past the half way to drink the water. Sponges are very nice.
* I went out on Eurostar - the ferry was full, heavens - which is fine; but I prefer the ferry. There's now a direct train a couple of times a day to Amsterdam. Rumour says no direct train back, but I don't care, as I got the ferry back as usual.
* As voodoo to appease my calves, I've taken to running in compression socks, which are a right pain to get on and off. In a fit of stupidity, I forgot to pack them, and so - choosing not to risk the anger of the gods - I bought another pair at the marathon expo. But practically the first thing that happened in the race was that the right sock fell down. Fortunately it's the left calf that tears, so the voodoo stayed strong.

Refs

* My so-called rival James barely managed to beat me by 5 minutes over an hour.

Your family is your football team

Not one of his best, more a collection of random phrases on top of loud muzak, but it provides "Death to the Trees!" which is my cue for...

Comment on “The global tree restoration potential” by Simon L. Lewis, Edward T. A. Mitchard, Colin Prentice, Mark Maslin, and Ben Poulter, Science Vol 366, Issue 6463 18 October 2019. Abstract:

Bastin et al. (Reports, 5 July 2019, p. 76) state that the restoration potential of new forests globally is 205 gigatonnes of carbon, conclude that “global tree restoration is our most effective climate change solution to date,” and state that climate change will drive the loss of 450 million hectares of existing tropical forest by 2050. Here we show that these three statements are incorrect.

And so on. I suppose we can call this the self-correcting nature of science, but actually it's more the malign Nature effect: wherein top journals an authors conspire to publish exciting-sounding findings, even if they're wrong.

That's only the first "reply". Leo Hickman has a nice Twatter thread with links to the other three, which I didn't bother read. I see I was wise enough to comment at the time, but over at RealClimate Stefan said the obvious things. Particularly dumb in the Bastin article, as the reply points out, is The stated 205 GtC restoration potential is 0.22 GtC Mha−1 new forest cover, double previously published estimates (2–5). This anomaly is not noted by the authors. That's inexcusable, both by the authors, and by Science editors / reviewers.

A survey of blog audiences

Following in the footsteps of thousands, I too am posting the below: 

We need your help! Share your views on climate change with us. 

Please share your views on climate change and reading blogs by filling out this survey. The data will be used for getting to know the readers of climate change blogs. 

What’s in it for you? 

• You have a chance on winning a $20 gift card of Amazon; 
• You will get a sneak preview of the preliminary results; 
• You will contribute to research on climate change blogs. 

Participation is anonymous, and your answers will be handled confidentially. The data is only used for research purposes. 

Your input is highly valued! Please fill out the survey by following this link.

There you go, that's their bit. As you'd hope, I shall snark a bit: they actually provided the post text in a Word doc, how charmingly naive. They seem nice though. FWIW, I didn't fill out the survey, because I got stuck on one of the questions and the survey very irritatingly refused to let me not answer the question. A mistake on their part I think. The question (as I said at Sou's place) I didn't like was "Social Justice (correcting injustice, care for the weak)". I'm all in favour of correcting injustice, and caring for the weak. But I'm not in favour of Social Justice because as a good Hayekian I think it is at best meaningless and at worst pernicious nonsense. And i the context of the Green New Deal I'm not going anywhere near SJ.

Graun: How do we rein in the fossil fuel industry? Here are eight ideas

Or, a random bunch of journos try to save the world. Are they journos? Who knows. Anyway, at least they're trying. What do they have to say? The subhead is Individual action alone won’t solve the climate crisis. So what political changes might help? IMO this is a bad start. Yes it is true that we need "bulk action" but bulk action is made of many individual actions. No one individual can solve the problem, but leading off with the negative is poor; at the core, the problem is an amalgam of individual choices. Similarly, the headline is poor. But let's go through the eight ideas.

Put climate on the ballot paper

Politicians need to feel this is a priority for the electorate. That means keeping the subject high on the agenda for MPs with questions, protests, emails, social media posts, lobbying by NGOs and most of all through voting choices. Not unreasonable. Doesn't discuss the problem that "put climate on the ballot paper" is itself rather tricky, at least in the UK.

End fossil fuel subsidies

The coal, oil and gas industries benefit from $5tn dollars a year... this is the same "it depends what you mean by subsidy" mistake that people keep making. And of course it isn't the case that the Evil Fossil Fuel industry gets all or even most of these subsidies: most of them go to the consumers. Who also bear most of the costs, so it actually makes little sense to call them subsidies (no, most of the costs aren't GW). See IMF working paper 2019: Global Fossil Fuel Subsidies Remain Large: An Update Based on Country-Level Estimates etc. But then The UN secretary general, António Guterres, attacked the incentives in May, saying: “What we are doing is using taxpayers’ money … to destroy the world.” is then rather confusing, because there are no actual "hand outs" from the bulk of these "subsidies". The Graun wants the problem fixed, but fixed-with-pork, meaning not fixed: Cuts in fuel subsidies should not be used as an austerity measure that hurts the poor most.

Put a price on carbon

Ah well done you've got there; they even mange the EU’s scheme has been widely criticised... Carbon taxes don’t have to create economic losers, either – revenue neutral taxes redistribute the money to the people and are advocated by many.

Scale back demand for fossil fuels

Again, well done: Oil companies will sell oil for as long as there are buyers. I dislike the later ref to "social licence" which I think is inventing new rules, but never mind. All companies are responsive to economic pressure, however - bloody hell, has someone been letting economics leak into the Graun? The only way to cut emissions from oil in the long term is to stop using oil. Reducing demand is driven by government regulation and by technological development (also driven by regulation)... - ah, no, the Graun's econ only goes so far before they fall back on the unthinking and reflexive solution to all problems: moah regulation.

Stop flaring... Roll out large scale carbon capture and storage

I think they're running out of ideas now; flaring maybe needs to be addresses but I doubt in the large-scale view it matters much. CCS is not ready for the big time and quite likely never will be. But don't forget to notice the passing drivel: Oil companies have the expertise to roll out CCS... remove CO2 from the atmosphere by growing trees and plants, burning them for electricity, then sequestering the emissions. Everything has to be the fault of the Evil Fossil Fuel companies, in this case it's their fault for not doing CCS. But EFFC have fuck all expertise in growing and harvesting plants, or burning things to generate leccie... why is the Graun incapable of writing about GW without veering off the rails into madness?

Halt investment in fossil fuels

A popular idea, but the Graun is forgetting the market. People will stop investing in FF if they expect poor or risky returns, and not otherwise.

Establish market metrics on climate change

Nearly three years after the Paris agreement, world markets still have no mandatory, comparable data to measure the risks posed by the climate crisis at a company level. Again, I think this is stupid: large-scale investment is perfectly capable of seeing these risks if it wants to; wasting a pile of bureaucracy on mandatory reporting is just more regs for the sake of propping up and creating pork in the regulatory sector.

A review of a Review of The Stern Review on the Economics of Climate Change

Via Twatter (thanks VV) I find A Review of The Stern Review on the Economics of Climate Change by Martin "Ex" Weitzman, from 2007³. For those who've forgotten the Stern review was once dead² famous; I've been rather negative about it in various places, e.g. Running the rule over Stern’s numbers, Nordhaus on Stern, Stern takes bleaker view on warming? and so on.

The main problem with Stern was the use of a very low discount rate. which drives all or most of the conclusions, and Stern's failure to discuss this rather important point. MW leads off on this¹: The first strand is a formal aggregative model that relies for its conclusions primarily upon imposing a very low discount rate. Concerning this discount-rate aspect, I am skeptical of the Review’s formal analysis, but this essay points out that we are actually a lot less sure about what interest rate should be used for discounting climate change than is commonly acknowledged. So, fair enough: low, but there is indeed doubt about what should be used. Later on, after some analysis, there's I ultimately find such an extreme stance on the primacy of  δ ≈ 0, η ≈ 1 unconvincing when super-strong policy advice is so dependent upon nonconventional assumptions that go so strongly against mainstream economics.

Stern "used" the PAGE IAM, but in a slightly odd way. I'm sure I recall noticing this at the time, but can't find any of my quibbles written down. MW says

An IAM is essentially a model of economic growth with a controllable externality of endogenous greenhouse warming. The Review uses an IAM called PAGE, on which some numbers have been crunched and some conclusions have been based, but the exact connection between PAGE and  Stern’s conclusions is elusive, frustrating, and ultimately unsatisfactory for a professional economist who honestly wants to understand where the strong policy recommendations are coming from. The analytical core of the Review is chapter 6 (“Economic Modelling of Climate-Change Impacts”), which is loosely tied to PAGE. However, the rest of the book contains lots of stories and examples suggesting that difficult-to-quantify uncertainty  about really bad climate extremes may actually be an important informal part of Stern’s overall case. Economists are justifiably suspicious when someone refuses to aggregate various probability-weighted scenarios into an overall cost–benefit assessment, which at least can serve as a conversation starter. (How else are we to evaluate overall policy advice, such as what Stern recommends to us, except in the context of some overall model where assumptions and specifications are spelled out clearly?) As economic analysis, the Stern Review dwells in a nonscientific state of limbo where it uses an IAM but simultaneously refuses to commit to it or to any other consistent overarching framework within which its radical recommendations might be deconstructed and judged by others. Instead, the Review dances around the significance of the aggregative analysis of chapter 6 by arguing that conclusions from IAMs are suggestively useful but not crucial to the basic story line that anything above ultimate stabilization at ≈ 550 ppm of CO2e and Δ≈ 3˚C is self evidently just too risky for the planet to bear.

This is all rather devastating - and makes me wonder if those who've recommended this paper to me have actually read it, because I know they "like" Stern - but I'll stop quoting wodges of MW and move on to the second part, Fat Tails, wherein MW will try to clothe some parts of Stern’s intuitions about climate-change uncertainty in formal garb. In fact, this will turn out to be discount rates, too. And perhaps those who like it have read The moral of this story is that the Stern value may end up being more right than wrong when full accounting is made for the uncertainty of the discount rate itself, which arguably is the most important uncertainty of all in the economics of climate change and it's looking bad for the good guys? Probably not, because that's just "averaging" his and Stern's rates (they don't average, of course).

Ah, unfortunately, it all gets rather complex, with betas and risk free versus economy-wide interest rates coming in. I didn't follow all that, I'm afraid (probably, James' discussion of Weitzman's Dismal Theorem is relevant⁴). After that there were quite a lot of words, and it begins to become rather his (well-reasoned, worth reading) opinions. But I'd had a couple of glasses of red by then. Essentially the answer turns out to be that we don't really know "the" discount rate (as he acknowledges, it is treated in this and similar analyses as one rate, but of course in the real world there are many).

Part of trying to get the "correct" value is to match theory to existing observations: of assert return rates, of equity premiums. As he says, neither his values or Stern's fit everything. I rather like his: One interpretation of the asset return puzzles, which could also have some relevance for the economics of climate change, is the idea that investors are disproportionately afraid of rare disasters.. With this interpretation of the puzzles, people are willing to pay high premiums for relatively safe stores of value that might represent “catastrophe insurance” against out-of-sample or newly evolved rare disasters.

I'll pluck out another bit: To its great credit, the Review supports very strongly the politically unpalatable idea... substantial carbon taxes must be levied because energy users need desperately to start confronting the expensive reality that burning carbon has a significant externality cost that ought to be taken into account by being charged full freight for doing it. (This is the most central “inconvenient truth” of all, which was conveniently ignored in Al Gore’s award-winning film.).

Meanwhile, how does this work politically or as persuasion-to-the-public? The answer of course is that it doesn't: not only is it far too complex to be distilled into something that people can meaningfully think about, the answer if you push it hard enough is either "we don't know" or "catastrophe insurance".

Notes

1.  MW also notes the Stern Review consistently leans toward (and consistently phrases issues in terms of) assumptions and formulations that emphasize optimistically low expected costs of mitigation and pessimistically high expected damages from greenhouse warming—relative to most other studies of the economics of climate change but as he points out, compared to the discount rate that's relatively minor.

2. Oops.

3. Belatedly, I realise I was supposed to be looking at Tim Harford's words on MW's paper, not MW's paper itself. That would certainly be easier; you can skim TH's stuff in a minute. I find it hard to believe it was life-changing though; I think this stuff was familiar enough then, to anyone paying attention.

4. See-also Marty Weitzman: Dismally Wrong.

Refs

* Climate Change: Extinction or Adaptation? - Prof Steve Keen (via Twatter)
* On Hardworking Burglars and Bricklayers - Don Boudreaux

Institute of Economic Affairs in "publishes at least four books over two decades" shocker

Revealed: top UK thinktank spent decades undermining climate science comes from the Graun (via Twit). To be fair, the IEA are almost bound to be evil because they have the word "economic" in their name, but the Graun plumbs the depths of their villainy, at the rate of a book every 5 years. If I were paying for that, I'd want my money back. It looks like the Graun get bored about half way though writing the article, because they only bother identify the first two books, which date from 1994 and 1997. Perhaps their research dept hasn't been keeping up it's subscription.

I looked briefly at the second, Climate Change: Challenging the Conventional Wisdom. They provide a handy executive summary so you can tell the sort of drivel it is; regrettably the text is also conveniently available so I skimmed it; meh, you've seen it before and so had everyone else even in 1997. But drivel from 1997 is pretty thin gruel.

If you look at the IEA's research page, you discover - to your horror - that really the IEA doesn't give a toss about climate; oddly enough, their focus is economics. The most recent thing about GW I could find was "Debate: The pros and cons of carbon taxes" from November 2018 where we discover the shocking:

I would support a carbon tax – with strong conditions. The impact of carbon emissions is such that we cannot imagine a market dealing with the problem and their effects so dispersed that the transactions costs of market bargaining are simply impossible. This is not like my next-door neighbour building a factory and making a noise at 5am. My carbon emissions may be harming people in Bangladesh in 30 years’ time. The problems caused by carbon emissions are potentially so great that if we have to choose between the binaries of no tax or some kind of carbon tax (however imperfect), I would choose the latter. True, a carbon tax could be set at the wrong level, might not work properly because it is not internationalised, might come with heaps of institutional baggage and so on, but faced with a binary choice between two sets of risks, I would rather choose to be exposed to the institutional risks of getting things wrong in the hope that it will reduce the impact of climate change.

ZOMG, the fiends. Naturally, the Graun - addicted as it is to the phrase "global heating" - was uable to find this, preferring decades old rubbish. As usual, the Graun goes on about evil oil companies funding IEA, implying as usual that all the dosh went to funding denial, but as usual there's no evidence for that.

Pic: side of a (deceased) restaurant, Gaslight district, San Diego.

Refs

* Speaking of Twatter, people who really should know better are still getting the "subsidy" numbers wrong.

Re-retread: Revealed: the 20 firms behind a third of all carbon emissions

Revealed: the 20 firms behind a third of all carbon emissions breathlessly announces the Graun. Of course it is nothing new; it's just a minor update to Retread: Just 90 companies caused two-thirds of man-made global warming emissions? It makes the same mistakes as before: evil fossil fuel companies don't emit CO2; nice consumers like you and I and our friends do. Their other error, viz 1965 was chosen as the start point for this new data because recent research had revealed that by that stage the environmental impact of fossil fuels was known by industry leaders and politicians, particularly in the US, isn't new either. All of this is great fun to feed to the hungry choir, but will fall apart in the courts should it get there.

Update: no such article would be complete without Monbiot getting it wrong too, in the Graun. He isn't happy with it being the fault of the people that actually burn the fuel ("The big polluters’ masterstroke was to blame the climate crisis on you and me") and repeats the nonsense that evil fossil fuels companies knew stuff that wasn't public: 1965. This was the year in which the president of the American Petroleum Institute told his members that the carbon dioxide they produced could cause “marked changes in climate” by the year 2000. They knew what they were doing. And 1965 is far too early for any of this to be any better than speculative. See-also Early oil industry knowledge of CO2 and global warming?

Refs

* +++Divide By Cucumber Error. Please Reinstall Universe And Reboot +++
* Fiscal Monitor: How to Mitigate Climate Change - IMF - September 2019
* More of thesame from the Graun: Coal from six biggest miners in Australia produces more emissions than entire economy.
* Norway: We Are Not Responsible for Climate Impacts of Burning Our Oil - ClimateLiabilityNews

Bashing the Libertarians on carbon taxes

It's about time to write a post on this, which will be dull for all of you convinced L-haters, but on I go. In fact this is mostly a re-tread of Talking with the taxman about carbon from 2017.

In, for example this post, Don Boudreaux references - without comment, admittedly, but in fact approvingly; this is just one of many - a post at AIE asking Has Irwin Stelzer asked the right question on climate change? by Benjamin "who he?" Zycher. DB is generally sane and sensible on questions of economics and trade, but on carbon taxes alas his hatred of the govt and taxes shines through too strongly and he is unable to contribute to the conversation; which is a shame, and one of the reasons carbon taxes aren't doing well: because the people who should be most in favour of them are too pure in spirit to stoop to supporting them. Now I come to read the Irwin Stelzer article I find that it is barking mad: it begins Since we can’t be certain that the globe is warming... the mounting although still inconclusive evidence that the globe is warming... This is all gross stupidity. And all unnecessary (unless he needed to put that in to get past his editor), because his real point is something along the lines of we are in the position of a homeowner deciding whether to buy fire insurance. Which while not a perfect analogy isn't totally barking. The connection he needed to make was not with whether GW is happening or not - it clearly is, that by now is just the bleedin' obvious, you're a denialist or just pig-ignorant about GW if you haven't realised that - but with the effects and costs, which is still a difficult and much less certain matter. But that's not today's argument. Anyway, IS ends up finding the right answer despite starting from the wrong place, concluding that the “What To Do?” question presents conservative believers in markets with an opportunity, viz carbon taxes. Hurrah.

In response, BZ makes a number of tedious talking points all of which amount to wrapping words around the pre-judged answer "no", so aren't really worth reading in any detail. The fat tail stuff is particularly bad. Having not really understood that point (in the downside direction) he then attempts to assert there's a fat tail upside: the potential benefits from anthropogenic warming. Merely examine the NASA “greening” analysis of the earth: The peer-reviewed literature estimates that 70 percent of that effect is from carbon dioxide fertilization. A well-known Lancet study reports that far fewer people die from heat than from cold. He is correct that there will be some benefits; he is probably wrong that those benefits will exceed the costs; but he is definitely and unthinkingly wrong that there is a "fat tail" upside analogous to the potentially catastrophic downsides: there is no significant probability of huge benefits from GW. This is just some idiot pundit thinking out loud to himself in the shower¹. And the Libertarians lap it up. Anyone doing anything similar in economics would get shredded by Don Boudreaux; but on climate, happy ignorance is in vogue.

But the Green New Deal is still fuckwitted.

Update: 2019 / 10 / 13: I almost posted on this separately, but it isn't really worth it: Don Boudreaux recommends us to read a guy who wonders perhaps we could find a way to release quantities of a gas that might dilute the greenhouse effect. 2019 / 20 / 22: Equally unconvincing is The Public Choice Problems with Carbon Taxes by David Henderson.

Update 2021 / 06: also not worth it's own post is Response to request for input from SEC Commissioner Allison Herren Lee on ‘climate risk disclosures’ by the aforementioned BZ via CH. Alas, it is more silliness. The correct answer is not to quibble GW: it is instead to point out that having every single firm report on climate risks is dumb, since the risks are generic.

Notes

1. For an encore - presumably to prove that he really is a bonehead, in case you were in any doubt - BZ continues Perhaps more speculatively, the likelihood of a future glaciation, however distant in time, approaches certainty, and anthropogenic warming under such conditions might prove a significant benefit. this has been a stupid suggestion for quite a long time now.

Refs

* Do People Want to Be Free? by Pierre Lemieux
* Should presidents make policy? by Scott Sumner
* Sigh: another boneheaded article from the AIER: Troubles with the Economists’ Case for a Carbon Tax, by Joakim Book.
* The US Libertarian party (2016)
* The Meaning of Libertarianism by David R. Henderson; Thursday, January 9, 2020
* What individualism teaches us is that society is greater than the individual only in so far as it is free. In so far as it is controlled or directed, it is limited to the powers of the individual minds which control or direct it - Hayek.
* Yet more boneheadedness, this time from EconLib: Climate Change: A Tragedy of the Commons? by Pedro Schwartz

* More EconLib excuses and whining: The Game of Telephone: The Knowledge Problem in Regulation by Jon Murphy

* Climate Change: Compared to What? by Veronique de Rugy

* Bryan Caplan has a more thoughtful take: If the Only Way You Can Get Your Great Idea Implemented...