Evidently, that same scientific skepticism should be applied to models that claim to estimate the economic and social costs of climate change, as well.
The National Bureau of Economic Research recently published an analysis of these models by an economist at MIT. In short, the paper eviscerated the various models to estimate the social and economic damage of climate change, arguing that “these models have crucial flaws that make them close to useless as tools for policy analysis.”
The author further finds the models’ descriptions of climate change impacts have “no theoretical or empirical foundation” and points out that they “tell us nothing about the most important driver” of social costs of climate change, which is the likelihood of a catastrophic climate outcome (in terms of social impact, not temperature change).
He concludes that these models “create a perception of knowledge and precision, but that perception is illusory and misleading.”
The author delves into the details of the models to substantiate his condemning analysis of them. First, he points out the uncertainty about how sensitive the climate is to growing amounts of carbon in the atmosphere, which measures how the climate responds to a doubling of carbon in the atmosphere. The author notes that one peer-reviewed study even argued that “climate sensitivity is in the realm of the ‘unknowable.’”
Second, he points out that the economic models used to estimate the economic harm from an increase in temperature from “global warming” are “completely made up, with no theoretical or empirical foundation.” This is not because the economists who created the models were negligent, but because “there is no economy theory that can tell us what [the economic model] should look like.” The economic theory simply does not yet exist, and so the economists simply made up the models arbitrarily.
A final “major problem” pointed out by the author is that “the models ignore the possibility of a catastrophic climate outcome.” He defines this catastrophic outcome less by the size of the temperature increase than by the size of its economic or social welfare impact, because “what matters in the end is not the temperature increase itself, but rather its impact.” Since these models have nothing to say about the impacts of catastrophic climate change, they cannot be used to evaluate policies that are meant to mitigate the possible harm from catastrophic climate change, which significantly limits their value as tools for policy analysis.
The author concludes that these models have little value for informing proposed climate change policies because they “[allow] the modeler to obtain almost any desired result because the key inputs can be chosen arbitrarily.”
In other words, the next time you hear “progressive” ideologues or liberal activists claiming that their proposed climate change policies will save the state or the country millions (or billions) in harm from climate change, take it with a huge grain of salt.