Tuesday, May 06, 2014

Tol's Demon

Maxwell's Demon, is a cute little bunny who sits at the door between two bags of wind.  When the Demon sees a fast one coming from the right side she (the ladies are demons of course and the guys ogres, you never heard of Maxwell's ogre, did you?) opens the door and lets it through, but blocks the slow ones.  This lead to a paradox which was only solved when it was realized that the Demon did not work for free energy.

Which brings us to today's post.  Richard Tol has published a correction to 'The Economic Effects of Climate Change" which appeared in the Journal of Economic Perspectives (2009), with an interesting start

Gremlins intervened in the preparation of my paper "The Economic Effects of Climate Change" published in the Spring 2009 issue of this journal. In Table 1 of that paper, titled "Estimates of the Welfare Impact of Climate Change," minus signs were dropped from the two impact estimates, one by Plambeck and Hope (1996) and one by Hope (2006). In Figure 1 of that paper, titled "Fourteen Estimates of the Global Economic Impact of Climate Change," and in the various analyses that support that figure, the minus sign was dropped from only one of the two estimates.
Get Energy Smart Now parses the correction
“minus signs were dropped … minus sign was dropped”.
Who dropped those minus signs and “overlooked estimates”.  Evidently, those unnamed and nefarious “gremlins” who  ”intervened” to undermine the quality of Professor Tol’s research and publications.
Using the passive voice makes one wonder whether editors, research assistants, technical glitches, or Professor Tol, himself, were the “gremlins” who “intervened”.
without realizing that Tol's Demon is unidirectional

Richard was pushed to his correction by Bob Ward of the Grantham Insitute who looked at the original paper and commented on the possibility that these errors influenced the IPCC report and various EPA reports that referenced the FUND model and this paper.  Richard is his usual gracious self in describing the situation.  Get Energy Smart has some of the better details of the flame war that ensued with links, and Richard's acknowledgement is sweet
I am grateful to Bob Ward for finding a small error, to Mike Mastandrea for finding a bigger one, to Doug Arent for checking things again and again, to David Autor and Tim Taylor for their understanding, and to Ann Norman for superb editorial support. All remaining errors are, of course, mine and mine only.
ATTP has a post on the meaning of the correction which references to Grant McDermott's take on this especially when he removes the single hugely positive value, from guess whom, Tol's One Way Demon

The original with errors and Tol's positive value at 1 C had a positive bump.

This, will be chewed on by many, however Eli wants to point to a comment by Grant in the discussion
The most famous IAM, William Nordhaus’s DICE model, using a quadratic damage function that is calibrated on Tol (2009)… But offset by an (arbitrary) 25% adjustment factor to account for the many accounted factors such as biodiversity loss, extreme events, etc (see page 10, 11 here). The function in question is: D(T) = 0.00267*T + 0.00267*T^2, where T is change in global surface temperature relative to the pre-industrial period.
Eli, being a RTFR type of bunny went and RTFR, which reads
The 2013 model (DICE-ER) instead uses a highly simplified damage function that relies on current estimates of the damage function.  More precisely, DICE-2013 uses estimates of monetized damages from the Tol (2009) survey as the starting point.
Extra carrots if to anybunny who figures out what the Tol (2009) survey is.



Anonymous said...

Nothing could be more dismally unscientific than to try desperately to link climate change to the dismal science.

EliRabett said...

Projecting US Social Security financials 75 years into the future. E$li takes that personally

Anonymous said...

"Gremlins intervened" = "I didn't bother to proof-read the proofs".

Good to know that those unidirectional gremlins have moved on from messing with Christy and Spencer, though.


This could be Captain Bob Maxwell's demon, last seen chasing Wegman overboard.

EliRabett said...

Not the Bob Maxwell who took a long swim to nowhere?

Anonymous said...

Why do the orange dots show 12% reduction in GDP at 3C warming, but only 5% at 5C warming? That doesn't make sense, since all quantified studies show that things start to go really bad at the more extreme amounts of warming (like land photosynthesis stopping in the tropics).


Steve Bloom said...

Ray, AIUI most (all?) of those studies had just the one data point and largely inconsistent methodologies. Srsly. There's nothing fit about the resulting curve.

Eli, voila Tol's Demon. Why hire out such things if you can get a close relative to do the job for cheap?

Not long ago a commenter over at ATTP who was defending Tol (pre the current imbroglio) located a recent-ish quote from Nordhaus describing Tol as the leader in their field. That explains a lot.

Steve Bloom said...

Don't anybody miss this Nature article, released at the same as the WG2 report and pretty thoroughly trashing the IAMs.

Anonymous said...


Re: "pretty thoroughly trashing the IAMs"

There's also this NBER working paper by Robert Pindyck of the MIT Sloan School (2013), Climate Change Policy: What Do the Models Tell Us?. The abstract pretty well agrees with your assessment of the Nature article:

"Very little. A plethora of integrated assessment models (IAMs) have been constructed and used to estimate the social cost of carbon (SCC) and evaluate alternative abatement policies. These models have crucial flaws that make them close to useless as tools for policy analysis: certain inputs (e.g. the discount rate) are arbitrary, but have huge effects on the SCC estimates the models produce; the models' descriptions of the impact of climate change are completely ad hoc, with no theoretical or empirical foundation; and the models can tell us nothing about the most important driver of the SCC, the possibility of a catastrophic climate outcome. IAM-based analyses of climate policy create a perception of knowledge and precision, but that perception is illusory and misleading."

This is probably why Tol has made the economic analysis of SCC his playground.

Taylor B

Bernard J. said...

The first comment here touches on a salient point.

These economic analyses are based on an incomplete - and in many instances, absent - understanding of the responses of the natural world to warming. The current economic paradigm might regard such as externalities but they are not, and time is the single paramenter that will prove this.

And the surprises will be biased toward the nasty sort. That's just what happens when ecosystems are perurbed. For mine, a post hoc consideration of the data in the plot above will likely be absent of the 5% point that disturbed Raypierre, and instead describe a fitted curve that would likely include in its derivation the orange point in the legend as if that point was placed in the same location but on the graph itself.

Bernard J. said...


EliRabett said...

Thank you Steve.

Anonymous said...

So, should we expect a recession since summer is coming?

Michael Tobis said...

Lord Stern spoke up on IAMs last year. He says IAMs come close to assuming directly that the impacts and costs will be modest and close to excluding the possibility of catastrophic outcomes.

Stern, Nicholas. 2013. "The Structure of Economic Modeling of the Potential Impacts of Climate Change: Grafting Gross Underestimation of Risk onto Already Narrow Science Models." Journal of Economic Literature, 51(3): 838-59.

DOI: 10.1257/jel.51.3.838


Scientists describe the scale of the risks from unmanaged climate change as potentially immense. However, the scientific models, because they omit key factors that are hard to capture precisely, appear to substantially underestimate these risks. Many economic models add further gross underassessment of risk because the assumptions built into the economic modeling on growth, damages and risks, come close to assuming directly that the impacts and costs will be modest and close to excluding the possibility of catastrophic outcomes. A new generation of models is needed in all three of climate science, impact and economics with a still stronger focus on lives and livelihoods, including the risks of large-scale migration and conflicts.

Michael Tobis said...

The real key, as I understand it, is that IAMs linearize around a phenomenologically mysterious "underlying growth rate" vaguely attributed to "technical progress". That is, a growing economy is assumed before the calculation starts.

Their other flaws, however numerous, pale next to this burned-in optimism. Linearizations are flatly inappropriate for large perturbations, and it's exactly the question at hand at what point the climate perturbation becomes dynamically large, enough to invalidate the linearization. The IAMs are consequently precisely useless in addressing this question.

While one would expect this to be obvious to any quantitative scientist, for some reason it is not obvious to most economists.

Anonymous said...

" because they omit key factors that are hard to capture precisely, appear to substantially underestimate these risks. "

Hee-hee. Unknown, presumed calamitous.

willard said...

A Sterner report:


Via Grant McDermott:



He's still bobbng around somewhere in the vicinity of the Pergamon seamount.

Too bad he missed the boat on vanity press climatology.

Boro Nut said...

@ raypierre
"Why do the orange dots show 12% reduction in GDP at 3C warming, but only 5% at 5C warming?"

Basically, at 4.5C warming everyone clocks off and goes to the beach, at which point ice cream sales go through the roof.

Anonymous said...

How much longer must we Tolerate such inTolerableness?


Ask not for whom the Tol dulls

Anonymous said...

For Whom the Bull Tols