Sunday, December 01, 2019

Economists and climate change: Building castles in the sky

Economist John Kenneth Galbraith once said that "the only function of economic forecasting is to make astrology look respectable." Unfortunately, when some economists turn their sights on the economics of climate change, their unreliable methods imperil not just the economic life of humankind but its very existence.

I have written previously about this phenomenon in 2007 about how economists underestimate the critical importance of small (by economic value) but critical parts of the economy such as agriculture, forestry, and energy and in 2012 about how unsuited our current infrastructure is to the unfolding climate.

The trouble is that against all evidence, some climate economists keep building castles in the sky. Nobel Prize winner William Nordhaus is among the most prominent economists working on climate change and its economic effects. In short, Nordhaus, who is mentioned both in my 2007 and 2012 pieces, tells us not to worry too much about climate change. It will be cheaper to adapt to it than to prevent it or slow it down.