I've talked about DICE damage functions before, and really all the same problems apply: yes there are problems with them, but you need to stop whinging about them and propose something better.
SK's conclusion - that these methods are Drastically underestimating damages from Global Warming - is I think largely unfounded based on his analysis, even if you grant most of his case; because almost all of his argument is attacking the existing damage functions, without replacing them, so he is in no position to estimate damages himself. SK notes that Natural scientists' estimates [of the damages from climate change] were 20 to 30 times higher than mainstream economists, which is fair enough, but doesn't resolve anything: those who know about GDP think the damage is low, those who know about the physics think it high. Another nice quote is it was hardly surprising, given that the economists know little about the intricate web of natural ecosystems, whereas natural scientists know equally little about the incredible adaptability of human societies.
SK tells me that Nordhaus assumes that 87% of GDP is unaffected by GW, and I'll assume that's true: Nordhaus justified the assumption that 87% of GDP will be unaffected by climate change on the basis that: for the bulk of the economy—manufacturing, mining, utilities, finance, trade, and most service industries—it is difficult to find major direct impacts of the projected climate changes over the next 50 to 75 years. (Nordhaus 1991, p. 932). SK is clearly not happy with N's analysis but provides nothing to dispute it; and it seems not implausible to me, and likely that the not-affected share will rise over time.
Other than disliking IAM's damage functions, and - I rather suspect, given his apparently gratuitous attacks on "neoclassical" economics - cost-benefit analysis at all, it is hard to know what SK's positive programme is. My guess is that he'd like to dispose of the CBA, and simply use something like a 2 oC temperature limit instead. This amounts to throwing out not just neoclassical, but all, economics and replacing it with a finger-in-the-air temperature target, albeit one that is widely diffused. I think that's a bad idea.
Keen: who he?
Who was that masked man, you'll be wondering. There's a wiki page. Guess what? He's a brexiteer (boo, hiss). He endorsed Corbyn, tee hee. Possibly more relevant to the issues here is his Debunking Economics.
* Cost and the Agony of Choice by Steven Horwitz at EconLib
* Crop Yields Under Global Warming - 2018
* Mass starvation is humanity’s fate if we keep flogging the land to death? - 2017
* According to the profession’s most popular theoretical models, optimal tax rates on capital
should be equal to zero in the long run–including from the viewpoint of those individuals or
dynasties who own no capital at all - Piketty and Saez (whose personal opinion differs) - h/t Timmy.
* The Opportunity Costs of J. Alfred Prufock - Econlib.
* "New paper @NatureClimate on DICE modelling in support of Paris Agreement targets. Typically Nordhaus' DICE yields 3-4C as "optimal" temp by 2100". Paywalled, so I haven't read it, but I think they've just near-zeroed the discount rate.
* Collectively, climate tipping points increase the social cost of carbon (SCC) by ∼25% in our main specification. The distribution is positively skewed, however. We estimate an ∼10% chance of climate tipping points more than doubling the SCC - from Economic impacts of tipping points in the climate system by Simon Dietz, James Rising, Thomas Stoerk, and Gernot Wagner.
* Why Yes, I Am Boring Enough To Read The Footnotes - TW's new Substack.