Nordhaus

William Nordhaus

I was happy to see that William Nordhaus won (half of) the Nobel Prize in economics this year.

First, because it highlighted the importance of the impacts of climate change, and also because (and no one I read mentioned this) it was kind of a slap across the face of Republicans.

Nordhaus was an architect of cap-n-trade, back when Republicans at least pretended to care about climate change, in the GHW Bush administration. Cap-n-trade was then seen as the free market solution to global warming. It didn't come to much, but is still often the preferred method of addressing climate change (as in Oregon), because, as far as I can tell, it allows politicians to put real caps on greenhouse emissions, and because it doesn't involve the word "tax," as in "carbon tax."

Nordhaus now thinks a carbon tax is superior. My impression is that now a carbon tax (revenue neutral, possibly with a dividend) is seen as the most efficient program. But it's still seen as a tax, and changing the wording to "carbon fee" doesn't seem to fool anyone.

Anyway, a few years ago I read Nordhaus's book The Climate Casino. I have to admit I didn't get a lot out of it. He didn't get into the guts of explaining his DICE model, which is what I was looking for, but maybe not the general reader.

I try to understand economics when I come across it, but a few things get in my way. I am terrible at understanding graphs like this one -- I don't know if I have a mental block or what, but I always have to think hard to puzzle my way through them.

What could be simpler, right? But by now I partly freeze-up when I see one, just due to anxiety from past anxieties, and have to overcome that to see what the graph says. Dumb.

But I do like collecting economics data from FRED.org, and looking for trends and changes.

It bothers me that economists never put error bars or uncertainty bands on their results. I'm guessing that's because it's hard enough to just get a model -- in the case of environmental economics, just to come up with basic equations that relate economic observables to climate observables -- let alone to worry about the uncertainties. This seems, to me, to imply that env econ results are far more precise than they really are.

Also, I've always found the equations economists come up with to be exceptionally ugly. At least compared to those of physics. They're full of asterisks and twiddles (tildes) and hats (carets) and primes, and subscripts high and low. Even subscripts on subscripts. They're just a mess. Here's an example of what I mean, from a more-or-less random paper I found by Paul Krugman:

Really?? And there are worse. 

Anyway, I heard Nordhaus being interviewed on the radio the other day when I was driving somewhere, and he seemed like the nicest, most gentle guy anywhere.