Hotter Doesn't Always Mean Worse: The Value of Healthy Skepticism Towards Climate Change Activism

A senior fellow from the American Enterprise Institute, Roger Pielke Jr., took aim at climate change economics. It was not enough for Pielke to point to a redacted paper that claimed doing nothing with climate change would cause a whopping $38 trillion in damage. Keep in mind that this paper was quite influential in climate change policy, much like Neil Ferguson's COVID lockdown model was an abject failure. Pielke pointed out a recent study from the University of Wyoming entitled The Empirically Inscrutable Climate-Economy Relationship.

Why is this new study come with an inconvenient truth? Most climate change activists do not simply say that global temperatures are increasing. They posit that each increase in global temperature means that it will produce immeasurable harm. It is from this assumption that you get policy suggestions like Net Zero or the Paris Agreement. A lot of climate change modeling translates temperature into dollar losses. The problem, as this new study details, is that it is based on shaky ground. 

There are countries out there that have similar temperatures and affluences. The authors point to El Salvador and Iraq as examples to remind us that there are a number of confounding factors that influence economic growth beyond temperature: institutions, education, technology, trade, and culture. Certain adaptations also change the relationship to heat, including air conditioning, crop switching, migration, and infrastructure changes. It means climate change scientists are trying to estimate a moving target, not a stable law. 

This does not even get into the fact that reliable economic data goes back only a few decades, especially for more developing countries. The problem is not only with imperfect data. It is impossible to isolate temperature as the sole factor, which makes the house of climate change economics built on quicksand. 

Is this to say that climate change is a hoax? No, it does not. To quote Mercatus Center scholar Jack Salmon, "they [the authors of the study] are not claiming that climate change is harmless or that reducing emissions lacks value The existence of a negative carbon eternality remains well-established. What they are challenging is the confidence with which economists, and especially policymakers, treat specific numerical estimates of climate change."

Good policy is supposed to weigh the costs and benefits. However, if the benefits of avoided damage is highly uncertain, model-dependent, and sensitive to assumptions, as is the case with climate change economics, then you cannot reliably say that a given policy is worthwhile. 

Does it sound familiar? We dealt with this during the COVID pandemic. Lockdown Lovers kept forcing lockdowns down our throats during the pandemic. They claimed that skepticism of the lockdowns meant that you wanted Granny dead. How did that weaponization of kindness turn out? You can read more here, but it meant trillions in economic damage, causing even more health problems than the lockdown solved, and helping society writ large take a nosedive. 

What does that mean for climate policy? If this core relationship between temperature and economic output is fragile, then the foundation for confident, large-scale climate policy like carbon taxes, cap-and-trade, or energy-efficiency mandates is tenuous. 

This does not mean we should do nothing. It means getting off the moral high horse and stopping virtue-signaling the fake certainty. It means injecting a little humility into the conversation. After all, we have seen this movie play out with the COVID pandemic. Uncertain models get translated into certain policy prescriptions, dissent gets quashed, and tradeoffs get shunted to the side because it is too inconvenient to address. 

The sad irony is that the more uncertain the underlying assumptions become, the more confident climate change activists come in with sweeping mandates and regulations. What emerges is not better policy, but simply more confidence where it becomes less and less defensible. But don't worry. We're still told to "follow the science."