The Cost of Climate Change: Steve Keen Dismantles William Nordhaus

Lambert here: Some of you may remember an exchange between Keen and Nordhaus on the Twitter linked to here. Keen covers the same ground in depth here, with the same result.

By Steve Keen, Professor of Economics and Head of the School of Economics, Politics and History at Kingston University London, author of Debunking Economics, and the developer of Minsky open source system dynamics modeling program. Originally published at Evonomics.

This piece is part of a series from Steve Keen, Climate Change and the Nobel Prize in Economics: The Age of Rebellion. From the previous post:

  • William Nordhaus of The Breakthrough Institute recently won the Nobel Prize in Economics based on his work on climate change.
  • Extinction Rebellion, a UK-based youth movement, is demanding policies that would cause net zero carbon emissions by 2025 and limiting global warming to no more than 1.5 degrees.
  • William Nordhaus’ research encourages policy makers to manage global climate so it stabilizes at 4 degrees by the mid 22nd century.
  • Nordhaus’ research also argues that limiting global warming to 1.5 degrees would cost the global economy more than 50 trillion US dollars, while yielding benefits of well under US$5 trillion.

In this post, Keen delves into DICE (“Dynamic Integrated model of Climate and the Economy”)—the mathematical model underpinning Nordhaus’ work and the flaws in Nordhaus’ methodologies.

DICE stands for “Dynamic Integrated model of Climate and the Economy”. It’s the mathematical model from which Nordhaus derives the results noted in the previous figures.

DICE is based on the Neoclassical long term growth model devised by the mathematical prodigy Frank Ramsey in 1928 {Ramsey, 1928 #5029}. This is the same foundation as the mainstream RBC (“Real Business Cycle”) and DSGE (“Dynamic Stochastic General Equilibrium”) macroeconomic models that completely failed to anticipate the 2008 Global Financial Crisis.

That its macroeconomic cousins fared so badly at their chosen task is cause enough for concern. These models were intended to forecast short-term economic growth, and were completely wrong about the immediate economic future, to disastrous effect. That should at least raise some concerns. Was this failure just because the underlying technology was never meant to handle short-term economic dynamics? Or is the underlying Neoclassical growth model itself simply a poor model of reality?

This is a serious issue that I’ll take up in later chapters. However, the features that Nordhaus has added to model Climate Change are far worse than the inadequate foundation on which it was built.

DICE’s major additions to the standard model are:

  • A “damage function” that relates the increase in average global temperature to a decline in GDP. This is the source of the “Future damages” estimates shown in Figure 2 (in the previous post);
  • An “abatement function” that calculates the cost of reducing global temperature rise over what would happen if nothing were done to tackle Climate Change. This is the source of “Present abatement” estimates shown in Figure 2; and
  • Equations to relate GDP growth to the increase in CO2 levels in the atmosphere, along with the impact of that increased CO2 on the average global temperature.

Many critics have focused upon the high discount rate that Nordhaus chose to apply calculate the value to existing generations of reducing future Global Warming. But by far the most egregious fallacy in Nordhaus’s model is its Damage Function.

Nordhaus’s Damage Function is the first substantive graphic in the DICE manual, and one look at it (see Figure 8) should give anyone—even Climate Change Deniers (CCDs)—cause for concern. Even if Anthropogenic Global Warming were a myth, even if the temperature rise was being caused by the Sun, would it really be true that a 5 degree increase in the average temperature of the globe would only reduce global GDP by 5 percent?

Figure 3: Nordhaus’s Damage Function, showing the estimated reduction in GDP for an increase in global mean temperature

This is not, as is sometimes believed, the result of Nordhaus applying a high discount rate to the impact of climate change in the distant future. This instead is his estimate of how much lower global GDP would be in the future—say, 130 years from now—compared to what it would have been, if temperatures had instead remained at pre-industrial levels. Given the urgency that characterises the Global Warming debate, this is, on the face of it, an extremely benign view of the impact of an increase in the global average temperature on GDP.

He reiterated this benign view in a 2017 paper, “Revisiting the social cost of carbon” {Nordhaus, 2017 #5559}:

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. {Nordhaus, 2017 #5559, p. 1519}

If the predictions of Nordhaus’s Damage Function were true, then everyone—including Climate Change Believers (CCBs)—should just relax. An 8.5 percent fall in GDP is twice as bad as the “Great Recession”, as Americans call the 2008 crisis, which reduced real GDP by 4.2% peak to trough. But that happened in just under two years, so the annual decline in GDP was a very noticeable 2%. The 8.5% decline that Nordhaus predicts from a 6 degree increase in average global temperature (here CCDs will have to pretend that AGW is real) would take 130 years if nothing were done to attenuate Climate Change, according to Nordhaus’s model (see Figure 1). Spread over more than a century, that 8.5% fall would mean a decline in GDP growth of less than 0.1% per year. At the accuracy with which change in GDP is measured, that’s little better than rounding error. We should all just sit back and enjoy the extra warmth.

Except those in New York, London, Sydney, Cape Town, Los Angeles, San Francisco, and numerous other coastal cities of course, because they be too busy moving to higher ground: 6 degrees is well above the threshold at which all of Greenland and the Antarctic will melt completely (even if it’s the Sun’s fault, rather than AGW). 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.

Human settlements closer to the Equator that are well above sea level will be safe from rising sea waters, but they will also be on the move: a 6 degree increase in temperature will make many of them 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 (see Figure 4 and Figure 5).

So all this human movement, and all this city rebuilding, plus everything else that a 6 degree rise in temperature (however it was caused) would trigger, will only reduce global GDP by 8.5%? This claim fails what Robert Solow appropriately christened “the smell test” {Solow, 2010 #5078, p. 12}: if an economic model returns a prediction like this, it has to be … fill in your favourite expletive here.

Figure 4: Cities in Africa whose average summer temperatures today exceed 34 degrees for at least one month

Figure 5: Cities in Asia/Middle East whose average summer temperatures today exceed 34 degrees for at least one month

It doesn’t take long to find the sources of [expletive deleted] in Nordhaus’s model. There are several, but the most egregious of all is the mathematical form of his “Damage Function”.

Mostly Harmless

With all the obvious complexities and uncertainties in the whole issue of how climate interacts with the economy and vice versa, Nordhaus chose to use the second-simplest relationship possible between two variables: a quadratic. He simply assumes that the relationship between change in global temperature (relative to the level in 1900) and reduction in GDP is a function of the temperature difference squared:

“The current version assumes that damages are a quadratic function of temperature change” {Nordhaus, 2013 #5673, p. 11}

His estimate of the damages to GDP from an increase in temperature over pre-industrial levels is shown in Equation
and Figure 6.

Figure 6: The parameters for Nordhaus’s estimate of damage from temperature change in the code for his DICE model

One property of a quadratic is that there are no discontinuities, and therefore no points at which the relationship implied by the function simply breaks down. In the context of modelling climate change, using a quadratic for the relationship between an increase in global temperature and the economy implies that there are no temperature levels that set off catastrophic breakdown in the economy by triggering fundamental qualitative shifts in the climate—such as melting the icecaps, stopping the Gulf Stream, or turning El Nino from a temporary phenomenon into a permanent one. Nordhaus acknowledges this in the same sentence, and justifies the absence of such a feature in his Damage Function by an appeal to a survey of actual climate scientists about whether there are tipping points in the climate:

The current version assumes that damages are a quadratic function of temperature change and does not include sharp thresholds or tipping points, but this is consistent with the survey by Lenton et al. (2008).” {Nordhaus, 2013 #5673, p. 11}

So climate scientists concurred that there are no “sharp thresholds or tipping points” in the climate—or at least, in the relationship between temperature increase and the economy? I wanted to see evidence of that. I expected a detailed exposition of this research, since this assertion is crucial to Nordhaus’s choice of a simple quadratic to model economic damages from climate change.

I was disappointed. Not only was there no further explanation, there was no reference for Lenton in his bibliography either. Fortunately, the paper (Lenton, T. M., H. Held, et al. (2008). “Tipping elements in the Earth’s climate system.” Proceedings of the National Academy of Sciences
105(6): 1786-1793) can be found online {Lenton, 2008 #5678}. Since this paper played a key role in Nordhaus’s justification of his simple damage equation, I decided to check it very carefully—something Nordhaus himself quite obviously did not do.

There is one sentence in this paper, and only one sentence (in the paper’s third paragraph), which could be construed to support Nordhaus’s interpretation that the absence of “sharp thresholds or tipping points” in his Damage Function is “consistent with the survey by Lenton”. It is the statement that:

Many of the systems we consider do not yet have convincingly established tipping points. {Lenton, 2008 #5678, p. 1786}

However, the point of the paper was to try to quantify those tipping points—not to argue that they don’t exist! The very next sentence makes this obvious:

Nevertheless, increasing political demand to define and justify binding temperature targets, as well as wider societal interest in nonlinear climate changes, makes it timely to review potential tipping elements in the climate system under anthropogenic forcing. {Lenton, 2008 #5678, p. 1786}

The remainder of the paragraph confirms that the purpose of the survey was to provide what was currently missing (” convincingly established tipping points”), not to decide whether tipping points exist or not and conclude in the negative:

To this end, we organized a workshop entitled ”Tipping Points in the Earth System” at the British Embassy, Berlin, which brought together 36 leading experts, and we conducted an expert elicitation that involved 52 members of the international scientific community. Here we combine a critical review of the literature with the results of the workshop to compile a short list of potential policy-relevant future tipping elements in the climate system. Results from the expert elicitation are used to rank a subset of these tipping elements in terms of their sensitivity to global warming and the associated uncertainty. {Lenton, 2008 #5678, p. 1786. Emphasis added}

Far from justifying the absence of “tipping points” in any model of the relationship between the economy and global warming, the paper asserts that tipping points exist, and pretending that they don’t exist, via “smooth projections of global change”, could, rather than providing a sensible guide to policy, lull society “into a false sense of security”:

Society may be lulled into a false sense of security by smooth projections of global change. Our synthesis of present knowledge suggests that a variety of tipping elements could reach their critical point within this century under anthropogenic climate change. The greatest threats are tipping the Arctic sea-ice and the Greenland ice sheet, and at least five other elements could surprise us by exhibiting a nearby tipping point. This knowledge should influence climate policy… {Lenton, 2008 #5678, p. 1792. Emphasis added}

The survey restricted itself to large components of the Earth’s biosphere, with tipping points that could occur in this century, and whose effects would be felt within this millennium:

We consider ”components” of the Earth system that are associated with a specific region (or collection of regions) of the globe and are at least subcontinental in scale (length scale of order 1,000 km)… we focus on the consequences of decisions enacted within this century that trigger a qualitative change within this millennium, and we exclude tipping elements whose fate is decided after 2100 {Lenton, 2008 #5678, pp. 1786-87}.

Figure 7: The systems with tipping points considered in Lenton’s survey

Contrary to Nordhaus’s claim that Lenton’s work supported the exclusion of tipping points from his Damage Function, Lenton’s survey concluded that there were two tipping points that had a high probability of being triggered this century (Arctic sea ice and Greenland’s ice sheet), and five more that might be triggered:

Our synthesis of present knowledge suggests that a variety of tipping elements could reach their critical point within this century under anthropogenic climate change. The greatest threats are tipping the Arctic sea-ice and the Greenland ice sheet, and at least five other elements could surprise us by exhibiting a nearby tipping point. {Lenton, 2008 #5678, pp. 1792. Emphasis added.}

So the very reference that Nordhaus uses to justify not having a tipping point in his Damage Function establishes that his Damage Function should have a tipping point.

Nordhaus does at least express a caveat or three about the simplistic, and clearly unjustified function he used for his model:

I would note an important warning about the functional form in equation (5) when using for large temperature increases. The damage function has been calibrated for damage estimates in the range of 0 to 3 °C. In reality, estimates of damage functions are virtually non-existent for temperature increases above 3 °C. Note also that the functional form in (5), which puts the damage ratio in the denominator, is designed to ensure that damages do not exceed 100% of output, and this limits the usefulness of this approach for catastrophic climate change. The damage function needs to be examined carefully or re-specified in cases of higher warming or catastrophic damages. {Nordhaus, 2013 #5673, p. 11}

Paraphrasing this, “if there aren’t tipping points in the global climate, then you can use my model to guide policy; but if there are, you’re on your own”. That’s about as useful as a car without a steering wheel. It will work fine if you’re on a straight road, but if the road bends, you’re dead. And Climate Change is the ultimate “long and windy road”.

That might sound harsh—and it is. But justifiably so. We use models to guide us in situations that we have not yet encountered, or in which we have made policy mistakes in the past. It is no defence of a model to say—after the catastrophe that it said couldn’t happen did happen—that it was only designed for situations in which catastrophes didn’t occur. Ironically, that is precisely the defence that Ben Bernanke made of mainstream macroeconomic models after the 2008 financial crisis:

Although economists have much to learn from this crisis, as I will discuss, I think that calls for a radical reworking of the field go too far… Economic models are useful only in the context for which they are designed. Most of the time, including during recessions, serious financial instability is not an issue. The standard models were designed for these non-crisis periods, and they have proven quite useful in that context. {Bernanke, 2010 #1474}

That is a fob-off, not a justification for models that only work during “non-crisis periods”. A model that only applies in conditions where it is not needed, when you don’t have an alternative when it is needed, is worse than useless. It, as Lenton’s paper stated, lulls you “into a false sense of security”, which evaporates catastrophically when the actual catastrophe strikes.

With macroeconomics itself, such useless models let the world walk blindfolded into the biggest economic crisis since the Great Depression. However painful that crisis was, it will be nothing on the ecological and economy calamities that will occur if any of the tipping points noted by the “the survey by Lenton” are actually triggered.

This can easily be illustrated by replacing Nordhaus’s quadratic with a very similar one that does have tipping points: a “rational function“. This is a fraction with one polynomial divided by another. Since Nordhaus’s function is just a square of the (difference in) temperature, the required function has a constant times temperature to the third power on the numerator, and a linear function of temperature on the denominator.

For the denominator, since even Nordhaus predicts that “business as usual” would lead to a 4 degree increase in temperature by 2100 (see his “base” plot in Figure 1), and Lenton’s survey says the projected temperature increase this century could trigger at least two planetary tipping points, it’s reasonable to use 4 degrees as the tipping point temperature.

The only problem left is to choose a value for the constant multiplying the cube of the temperature increase on the numerator. I’ve set it so that this function and Nordhaus’s return the same level of damage for the only real data point we have: the 1 degree increase in temperature over pre-industrial levels that we have already experienced. Since Nordhaus’s latest DICE model uses a value of 0.00236 for the constant, the constant in this rational function has the value of minus three times Nordhaus’s coefficient. The damage equation with a tipping point is thus:

This makes an enormous difference to the implied damage to GDP from rising temperature levels. Contrary to Nordhaus’s assertion that caution is needed “when using [his model] for large temperature increases”, his model is unreliable for temperatures that are well within the levels on which he has made pronouncements about what global warming will do to GDP. Even at just a 1.5 degree increase—the level that Extinction Rebellion wants politicians to set as a maximum—the estimate of damages are almost twice Nordhaus’s estimate (see Table 1)

Table 1: Damages from a 4-degree tipping point versus Nordhaus’s quadratic function

At higher temperatures, but ones which are still well within the range over which Nordhaus deigns to make predictions, the disparity is even more marked. The 4-degree tipping point estimate of damage is 2.7% of GDP for a 2 degree rise—three times Nordhaus’s estimate. At 3 degrees, damages are 8 times as high. At 4 degrees, the ratio doesn’t matter, because the tipping point function says there would be no economy—versus Nordhaus’s prediction of a mere 3.6% decline over what it would have been in the absence of any change in temperature.

Figure 8: Nordhaus’ Damage Function versus one based on a 4-degree tipping point function

This alone is enough to reject outright Nordhaus’s assurances about the manageability of climate change. Nordhaus has put the world into a Dirty Harry movie gone bad: having advised policymakers that a simple and low tax on carbon is a Magnum 44 for shooting climate change, they scoff at the danger, telling climate change “‘Do you feel lucky, punk?”. In reality, climate change is armed with a howitzer, and the policy Nordhaus recommends—letting the global temperature reach levels 4 degrees above pre-industrial levels—would unleash that howitzer.

But what about the data to which Nordhaus fitted his inappropriate function? Doesn’t that imply that 4 degrees isn’t so dangerous?

Republished with permission.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. Thomas P

    Another problem is that while GDP may well remain high, we’d have to use most of it to rebuild cities etc, not getting a comfortable life. GDP does not measure quality of life. Being forced to work 10 hours a day to stay alive in an air conditioned city in the middle of a desert may be great for GDP, but it’s not where I want to live.

    1. Andrew Foland

      We teach undergraduates in lab science courses that no number is meaningful or complete without a quoted error bar.

      On top of the modeling errors, the fits and their interpretation don’t show any awareness of the role of uncertainties in either regression or extrapolation.

      The tipoff is the 3 significant digits in the quadratic coefficient (0.00267). The data clearly support no more than about half a significant digit.

      My guess from eyeballing the plot of the data is that the confidence interval of that coefficient ranges from about 0.001 to 0.01, even if the model were actually right.

      If that’s right, the damage could very easily be four times what’s quoted. And if the temperature rises just one more degree than expected (also well within the uncertainty band of the temperature rise), it would make the damage nearly eight times the quoted value.

      And all of that assumes the modeling is correct with no tipping points.

      Also, why is damage capped at 100% of output? If GDP decreases 99%, and you lose part of your wealth base (due to flooding), your net loss is over 100% due to climate change.

      1. dutch

        The real problem with both Nordhaus’ and Keen’s damage functions is that neither is based upon any theoretical coupling between global average temperature and GDP. These functions are arbitrarily constructed to create an effect in the output of the model without any regard to the underlying physics of climate change. Furthermore there appears to be no effort to validate the damage function by comparing projections from the model to empirical data – largely because no such data exist. Where is the historical series listing GDP against temperature change? If there is any relationship between global temperature and GDP it must be mediated through human behavior, for which no equation can be written.

        1. Quill

          Sure. That is exactly Keen’s point and it’s a highly valid one. We have no real idea how bad this gets when. Could Nordhaus be right? Sure. Hell, he could even be overly pessimistic. (Though I personally would be the other way.) The point is, as you note, that we have no idea what the distribution is. And, without that, your guess is as good as the output of any model you care to name.

        2. Math is Your Friend

          “These functions are arbitrarily constructed to create an effect in the output of the model without any regard to the underlying physics of climate change.”

          It’s way worse than that. As you so aptly observed,

          “If there is any relationship between global temperature and GDP it must be mediated through human behavior, for which no equation can be written.”

          Furthermore, GDP will be an outcome of many interacting factors, human, physical, economic, technological, political, and ideological. There is no way that this can be predicted from temperature, particularly when the various forces involved start to react to the changes.

          Indeed, I suspect that economic theories will be the least useful inputs to the predictions, as the results will be rooted in the realities of the world. As more people think about ways of mitigating the rise in temperature, more and more methodologies will emerge.

          Today’s interesting find is this:

          Genetically engineered plants may make a useful contribution to reclaiming atmospheric CO2 into soil. It may be possible to tie this into restoring land to useful cultivation, as well. I expect this is just the beginning for improved plants, and they can have the advantage of operating without the complexities involved in mechanical/chemical forms of carbon capture.

          Personally, I suspect there may be higher rate biological processes that can be harnessed for turning CO2 gas into something else albeit at the cost of more effort on our part, but it is a good start, wisely low tech and low effort in deployment.

          While critics have complained that lack of discontinuities in the ‘damage function’ may underestimate damage, but ignoring discontinuities in the ‘mitigation function’ – if such was included – seriously underestimates the potential for useful strategies intended to attack different aspects of the warming problem.

          If one is talking about the temperature in 80 or 100 or 130 years, that’s a very very long time in technology and innovation. While some things are reasonably predictable, many others are not. Changes in work, production, policy, energy generation – all of these will affect the unfolding of the next 100 years.

          Consider if you will, the difference between what we knew and could do in 1919, compared to today. Then consider that the rate of invention is proportional to population (see L. Sprague de Campe, “The Ancient Engineers”, IIRC). We’ve got a lot more people than in 1918 by a fair margin, and with improved communications fewer people are likely to invent the same thing, if only because someone else beat them to it, and they know know it is a ‘solved problem’. We can expect accelerated change in the next 100 years… even if modern education and communication don’t speed that up even more.

          In short, it is unlikely that we can even imagine with any degree of accuracy the capabilities that will emerge over the next 50 years or so, nor can we necessarily project the policies and actions that will take place.

          Furthermore, we already have technologies that are not being fully deployed that have not been fully developed, which may have major impact on the way this all plays out.

          In many ways, these technologies could be highly synergistic. Consider several different needs…

          1. More electric power.
          2. More lithium.
          3. More fresh water.
          4. More uranium.
          5. Carbon capture.

          Properly done, a single project might be able to address all or most of these, simultaneously.

          Step one is a nuclear power plant. This provides electricity, and heat in the form of high temperature cooling water.

          Some of the electricity is a final product, but some can be used to run a combination flash evaporation/reverse osmosis desalination plant. In conventional desalination plants, getting the heat is a cost… in this case it is a byproduct of producing the electricity, at zero incremental fuel cost, without producing additional CO2.

          The production of fresh water produces brine as a byproduct. This brine, concentrated quite a bit over normal seawater, is normally dispersed back into the ocean.

          But before you do that, you can take advantage of the already collected, concentrated brine that you are already going to pump somewhere, and run it through a couple of processes first… one to extract lithium (I know lithium comes from brine, but don’t know relative concentrations, particularly if you drive the evaporation a bit further with the free heat, getting more fresh water and more concentrated brine).

          The other is to extract uranium. the current cost is about 300 USD/kg, when just pumping seawater through collectors. Given that the input, output, and pumping facilities exist already for desalination, and the brine is more concentrated, one suspects the marginal cost of uranium would be quite a bit lower.

          … which remarks:

          (“when you consider how big the ocean is, that works out to 500 times more uranium in the sea than could be mined on land – that’s 4 billion tons, or enough to run a thousand 1-gigawatt fission reactors for 100,000 years.”)

          If you want to do carbon capture on top of this, you can use some of the water for farming in suitable climates, or you could build water heated greenhouses in cold northern climates, with electricity available to support other needs of cultivation.

          But that’s just existing tech that we have now but are not using optimally. There is no way to predict what else we will have in twenty or thirty years.

          We could decide in five years that we really are going to build such projects, and improve plants, and seed clouds, and so on – enough of these and any long term predictions based on past trends will be founded on data that is no longer applicable.

          That’s what makes the ‘long term prediction game’ so fundamentally suspect.

      2. Bill Wald

        Human reaction to “human” and physical incidents seems chaotic, random, and more effected by the media than by logic or common sense. Anyone who can say “political science,” “social science,” or “economic science” with a straight face is fooling themselves.

  2. Fred Magyar

    The economist has no clothes!
    4 C above pre industrial baseline coupled with tipping points due to ocean acidification guarantees the extinction of most currently living plants and animals!
    The ecologist

  3. Mael Colium

    There is no such thing as the Nobel Prize for Economics. It is a prize for economics originally created by a Swedish Bank which is managed by the Nobel Trust and announced at the same time as the other real Nobel science and literature awards. Economics is not a science nor a literary award. We need to call out the parasites that masquerade with real science and enlightened thought.

    1. JEHR

      That’s the best information (that this particular Nobel Prize was created by a Bank) in deciding whether or not economics deserves any prize at all. Thanks for reminding us of this fact.

      1. Thomas P

        It was Svenska Riksbanken not any private bank, it’s the equivalent of the Treasury. The prize was created by public funds. Essentially, it’s one group on economists giving taxpayer money to other economists.

  4. Quanka

    This has the feeling of Mishkin in the Inside Job documentary.
    “Yeah – that was a mistake.”
    “Who told you that”
    “I had faith and I was paid a number to write this, which is public but which I wont state here”

      1. Chauncey Gardiner

        Ditto. Surely the economists who vetted the work of the various candidates for Sweden’s central bank’s Prize in Economic Sciences in Memory of Alfred Nobel also saw the flaws in Nordhaus’ DICE model. /sarc

        Regarding the “Nobel” cover for the DICE model, the term that likely applies is asymmetric strategy.

  5. john halasz

    Nordhaus is an academic. scholarly fraud. (He can’t be a scientific fraud, since economics is not a science, by any stretch of the word). Why is he and his ilk accorded any authority and credibility whatsoever?

    1. Roger Boyd

      They keep providing the answers that their masters’ want – many departments and chairs of economics were explicitly started and funded by private interests wanting politically acceptable answers. That’s why mainstream economics has the amazing ability to keep failing upwards, just like treasury ministers and central bankers. Once one sees that their “failures” are in fact financial and/or ideological successes for the financial elite one sees mainstream economics for what it truly is – a new religion inservice of the wealthy and powerful.

  6. David in Santa Cruz

    I keep coming back to the distinguished atmospheric and oceanic scholar at our great public university, the University of California Scripps Institute, Prof. Ram Ramanathan.

    The big driver of problems is going to be population displacement, migration, and conflict, which becomes critical at the 2 degrees Celsius predicted by 2050. Prof. Ramanathan and his colleagues estimate that 1.5 Billion people will be displaced by heat, and another 650 Million by increases in the range of disease vectors. This is a quarter of the world’s population.

    Not a pretty picture, and a tipping-point for sure as far as the quality of human life goes, both for those displaced and for those whose cozy existences are about to be disrupted by desperate invaders from the Equatorial regions:

    It’s real. It’s us. It’s here. It’s bad.

      1. Michael Fiorillo

        Case in point: aside from the malicious mischief of the the Saudis, Israelis, Americans and others in Syria, much of the underlying conflict there was driven initially by internal migrations caused by severe drought. The subsequent political and military crises turned that migration international.

    1. notabanker

      And of course the answer is a public private partnership to plot the course for climate engineering. With California Universities leading the way and the “private” partners mysteriously absent from the video and literature.

      What could possibly go wrong?

    2. Monty

      It’s a long swim from Africa and Asia. I predict that the Exceptional Nation will be giving itself an exception to helping those in need, if its a choice between that, or large local sacrifices.

  7. Susan the other`

    Why is somebody like Nordhaus even listened to? Thank you Steve Keen. This was a stunning refutation. I almost understood the quadratic equation part. Nordhaus is so far out,the only thing I could relate it to was the effectiveness of quantum mechanics – those guys can establish a reliable probability for anything. But wait – using this insipid Damage Function is so much nuttier than other math. It’s like Nordhaus has decided that everything in our world is stable because the universe is stable. I’d just like to submit that the universe is stable, as far as we can tell, because it is working all the way down to the infinitesimally small level. It is stabilized by agile and instantly adaptive superpositions at every mystical turn. We have no such failsafe in our world – the only failsafe we have had has been a generous and forgiving planet. If “economists” like Nordhaus ever get real they will look at all the variables (as infinite, I’d guess, as the rest of the universe). Ice melt of course; plant adaptation; bees; fish; trees; and questions currently avoided like the plague, like “Is the atmosphere really thinning and has it thinned by 30% since 1980?” How dangerous is that? “Are the oceans dying?” How dangerous is that? It’s all exponentially dangerous. Not quadratically.

  8. John

    Nordhaus was discredited long ago.

    And IIRC he was brutally taken down by Naomi Klein in This Changes Everything.

    1. Craig Dempsey

      I did not find Nordhaus in the index to Klein’s book, although his Breakthrough Institute is mentioned and demolished on page 57 and following. Of course, more generally, Klein does powerfully dissect the kind of propaganda economics he exemplifies. For any who have not read her books, they are well worth reading.

  9. Telee

    Is this the “contribution” that Nordhaus’s Nobel is based on? Quite amazing that such flawed work would be rewarded. We’re in deep trouble!

  10. Sound of the Suburbs

    “DICE is based on the Neoclassical long term growth model devised by the mathematical prodigy Frank Ramsey in 1928 {Ramsey, 1928 #5029}.”

    “Stocks have reached what looks like a permanently high plateau.” Irving Fisher 1929.

    Irving Fisher was a neoclassical economist that believed in free markets and he knew this was a stable equilibrium.

    He became a laughing stock.

    They had to wait 50 years before they bring back this old twaddle (neoclassical economics) and get people to believe in the markets again.

  11. Carey

    “..Quite amazing that such flawed work would be rewarded.”

    Or not, depending on who’s doing the rewarding.

  12. softie

    Some quotes from UK’s independent scientist James Lovelock’s predictions on climate change and mass mortality based on his Wikipedia page:

    Writing in the British newspaper The Independent in January 2006, Lovelock argues that, as a result of global warming, “billions of us will die and the few breeding pairs of people that survive will be in the Arctic where the climate remains tolerable” by the end of the 21st century. He has been quoted in The Guardian that 80% of humans will perish by 2100 AD, and this climate change will last 100,000 years.

    He further predicts, the average temperature in temperate regions will increase by as much as 8°C and by up to 5°C in the tropics, leaving much of the world’s land uninhabitable and unsuitable for farming, with northerly migrations and new cities created in the Arctic. He predicts much of Europe will become uninhabitable having turned to desert and Britain will become Europe’s “life-raft” due to its stable temperature caused by being surrounded by the ocean. He suggests that “we have to keep in mind the awesome pace of change and realise how little time is left to act, and then each community and nation must find the best use of the resources they have to sustain civilisation for as long as they can.”

    1. wilroncanada

      I’m not willing to look it up at this point, But did Lovelock write anything about the possible change in the course of the Gulf Stream, and how that might affect his proposed result? And further, did he indicate anything about that “Stable Island” being surrounded by an acid bath?

  13. Daniel Rich

    Quote: “…the 2008 Global Financial Crisis…”

    Reply: aka ‘The Great Casino Collapse’ [TGCC].

    It was so much ‘fun’ we’ll do it again!

  14. Greg

    The increase in head-of-cattle per bodies-of-cattle will bump agribusiness values enormously!

    1. Plenue

      I’m sure we can sustainably transition from chickens to radroaches. Our nutritional needs will be easily met.

        1. Duck1

          A few square miles of maggots will feed us and a few square miles of solar panels will power us. FTW.

  15. Monty

    “Cities in Africa whose average summer temperatures today exceed 34 degrees”

    …Or as we say in AZ, “Sweater Weather”.

  16. Frank

    An economist vs another economist but where is geology, physics, chemistry ? It doesn’t matter for economists. Enthrophy ? Doesn’t exist. Natural resources ? Endless. EROEI ? Who cares if doesn’t fit my economic model based on my own personal fantasies. Are these people so sure that do really exist enough fossil fuels (at any cost) which when burned will produce 2, 3 or 4 degrees warming ? A lot of fossil fuel industry insiders beg to think differently. If these fuels are so abundant, if the US have really 25 or 50 or 100 years of easily accessible fossil fuels why this continous war like status in the middle east ? Why Iraq ? Why bother with Iran ? Why bullying a nuclear hyper power like Russia ?

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