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Models v reality: Economic impacts edition

04 Mar 2020 | Science Notes

Newsflash: We don’t heat our houses in hot weather. Too obvious to mention? Alas no. It’s the sort of detail that matters when grave experts gather to estimate the social cost of carbon, aka why you’re a bad person to drive to work. They do their estimating via computer models, of course, which rely on assumptions like when it gets warmer we spend more on air conditioning, which believe it or not accounts for a big part of the estimate of the social cost of carbon. But won’t we also find ourselves spending less on heating? Duh. But the models have long assumed those savings will be far exceeded by the additional cooling costs. Now sometimes you have to rely on plausible assumptions because there’s no good data. But here there is. So why doesn’t someone go check it? Not long ago a pair of researchers did, and you’ll never guess what they found. An idle furnace in August.

The US has both a wide range of climates and very detailed data on household energy expenditures. So the authors of the study gathered up numbers from the US on how people adjust their energy spending as temperature varies and especially whether warming or cooling has the bigger effect. Aaack. As it warms, people spend less overall on energy, not more.

[Energy] expenditure decreases as temperatures increase, suggesting that global warming, by itself, may reduce US energy expenditure and thereby have a positive impact on US economic growth

Of course people do spend more on cooling their houses and offices when it’s warm than when it’s cool. But they spend less on space heating and other adaptations to cold weather and the researchers showed that the savings on heating exceed the increased cooling costs. Not by much, mind you. It’s basically a wash. But the finding washes away the models that assume the net effect is a big increase in costs and a hit to economic growth.

With so many people working on the climate change issue you’d think a lot of people would already have asked such an obvious question. But no, this study is the first time. Almost as if they didn’t want to hear that global warming wasn’t really terrible in every way.

Extrapolating to the global economy, the fact that the data so clearly contradict the model assumptions led the authors to conclude

the hypothesis that global warming would be harmful to the global economy this century may be false, and policies to reduce global warming may not be justified.

Whatever will they tell us next?

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