CAMBRIDGE, Mass. — Even temporary rises in local temperatures significantly damage long-term economic growth in the world’s developing nations, according to a new study co-authored by an MIT economist.
Looking at weather data over the last half-century, the study finds that every 1-degree-Celsius increase in a poor country, over the course of a given year, reduces its economic growth by about 1.3 percentage points. However, this only applies to the world’s developing nations; wealthier countries do not appear to be affected by the variations in temperature.
“Higher temperatures lead to substantially lower economic growth in poor countries,” says Ben Olken, a professor of economics at MIT, who helped conduct the research. And while it’s relatively straightforward to see how droughts and hot weather might hurt agriculture, the study indicates that hot spells have much wider economic effects.
“What we’re suggesting is that it’s much broader than [agriculture],” Olken adds. “It affects investment, political stability and industrial output.”
Varied effects on economies
The paper, “Temperature Shocks and Economic Growth: Evidence from the Last Half Century,” was published this summer in the American Economic Journal: Macroeconomics. Along with Olken, the authors are Melissa Dell PhD ’12, of Harvard University, who was a PhD candidate in MIT’s Department of Economics when the paper was produced, and Ben Jones PhD ’03, an economist at Northwestern University.
The study first gained public attention as a working paper in 2008. It collects temperature and economic-output data for each country in the world, in every year from 1950 through 2003, and analyzes the relationship between them. “We couldn’t believe no one had done it before, but we weren’t really sure we’d find anything at all,” Olken says.
By looking at economic data by type of activity, not just aggregate output, the researchers concluded there are a variety of “channels” through which weather shocks hurt economic production — by slowing down workers, commerce, and perhaps even capital investment.
“If you think about people working in factories on a 105-degree day with no air conditioning, you can see how it makes a difference,” Olken says.
One consequence of this, borne out in the data, is that the higher temperatures in a given year affect not only a country’s economic activity at the time, but its growth prospects far into the future; by the numbers, growth lagged following hot years.
To see why, Olken suggests, first think of a dry year for vegetables in your backyard garden: The bad weather would hurt the plants, but if the weather is reasonable the following year, the backyard crop would return to its normal level. Now contrast that with problems that affect, say, industrial and technological development, and capital investment; temperature shocks limiting those activities can compound over time.
“If you think about economic growth, you build on where you were last year,” Olken explains. For longer-term industrial or technological projects, he adds, “If it’s that kind of activity that’s lost, then it affects the country’s long-run growth rate, [and it’s] not a one-off hit.”
Political change in the weather
Olken, Dell and Jones also integrated data about forms of government into the study, and found that temperature shocks are associated with an increase in political instability. A 1-degree-Celsius rise in a given year, they found, raises the probability of “irregular leader transitions,” such as coups, by 3.1 percentage points in poor countries. In turn, the authors write, “poor economic performance and political instability are likely mutually reinforcing.”
Olivier Deschenes, an economist at the University of California at Santa Barbara, calls the study “an important finding because most of the prior research on the economic impacts of climate change have focused on a few sectors of the economy, predominantly the agricultural sector.” By contrast, he notes, the broader finding of the current paper matters “because the growth rate is a key measure of the economic success of a nation and the standard of living of its population.”
Deschenes, who also conducts research on the economic and health effects of temperature changes, suggests that the “next step” for scholars “is to identify adaptation strategies that can moderate the negative impacts of global climate change in the coming decades.”
As Olken observes, the study does not try to account for all the possible problems that could be generated by long-term climate change, such as rising oceans, floods or increased storms. Still, he adds, the paper does suggest some general points about the economic impact of a warming atmosphere. It is vital, he says, to “think about the heterogeneity of the impact between the poor and rich countries” when leaders and policymakers map out the problems the world may confront in the future.
“The impacts of these things are going to be worse for the countries that have the least ability to adapt to it,” he adds. “[We] want to think that through for the implications for future inequality. It’s a double whammy.”
Written by: Peter Dizikes, MIT News Office
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“Mad dogs and Englishmen go out in the noonday sun.”
It is well known (but barely documented in the peer-reviewed literature) that warm tropical weather suppresses physical activity. This in turn reduces general economic productivity.
Perhaps this answer is too simple and obvious to justify further funding: “More research is required to find out …”
More wasted taxpayer money.
Most of the world’s great civilizations flourished during periods of warmth and many perished when the climate turned cold. Facts are stubborn things: And the fact is that far more people die from cold temperatures than from warm weather.
In terms of economic production, it is very difficult for people or communites to produce anything when they can’t feed themselves because cold weather has shortened the growing season and killed their crops and livestock.
Yes, there are “economic and health effects” caused by temperature changes. And those ill effects are more pronounced during periods of extended cold.
A warm climate is not mankind’s enemy.
Same observation as others: The proper solution is to help these countries improve their living conditions so the temperature is not such a problem, not to reduce the rest of the world to the poor country’s level.
Poor countries, esp those from which they derive their bad effects stats, are equatorial. According to ‘global warming’ theory, equatorial countries will warm much less than mid latitude and polar countries. And according to the data, the ‘global warming’ isnt.
So the countires that would be harmed by warming wouldn’t be warming even if the globe were warming, which it isnt.
The countries that would be helped by warming would be warming if the globe were warming, but it isn’t.
“Higher temperatures lead to substantially lower economic growth in poor countries,”
This is ’cause and effect’ thinking without proper regard for the complexity of the problem. The results of a temperature increase could have no effect, a negative effect or a beneficial effect.
See http://en.wikipedia.org/wiki/List_of_countries_by_real_GDP_growth_rate_%28latest_year%29
Most poor countries have such a high economic growth % they won’t notice a 1.3 % loss or gain dependent on whether the temperature goes up or down a degree. Poor old Bhutan as an example will fall from 8.1% to 6.8% if the temperature goes up 1 deg C and to 9.4% if it goes down 1 deg C.
What a crock!!!
Dear Mr. Economist:
I would have expected better coming from MIT. But then an economist is not exactly the brightest of the lot. Since there are no certainties required, just spew out BS as deemed appropriate at any given time with any form of supporting theory.
Anyway, for the ‘bright economist”, consider a temp of 29F as opposed to unprecedented warming to 33F. No ice on the work site to contend with. Process water doesn’t freeze. Workers don’t spend time gathering fuel for heat so are more productive at work. Etc. Etc. Can you figure out that you may be an idiot or does someone need to explain it to you?
“Higher temperatures lead to substantially lower economic growth in poor countries, …” says Ben Olken
– Lower temperatures even worse … Love to see him paying my electrical bills during winter time …
“… from 1950 through 2003, and analyzes the relationship between them. “We couldn’t believe no one had done it before, but we weren’t really sure we’d find anything at all, …” Olken says.
– Real scientists are not content with just looking in one direction …
“If you think about people working in factories on a 105-degree day with no air conditioning, you can see how it makes a difference, …” Olken says.
– How about 32-35°F or lower w/o any heating? I would prefer 105°F at any time …
“ As Olken observes, …”
– He isn’t very observant …
This is as biased as the Swedish “gender science”, which don’t qualify as science, as it only takes into account the female perspective, not the male ditto … (leftist wannabe science)
Complete and utter BS. According to BEST, the earth has warmed 2.5C since 1750 and this has corresponded with a period of exceptional growth and human prosperity!
Didn’t “cold” lead to the French Revolution ?
We have the reverse effect in Germany in winter: Construction industry
down and transportation problems with ice and snow in the cold…..
This is part of the game…….
Adapting to heat is easier: Ice cubes, shower breaks…..
And last not least: The heat of the day only is from 1 to 6 pm with 40 C/105 F
Getting up early at 5 for work , then siesta after 2 pm….as in Spain
…We talk about organizing social life…appropriate coping with
conditions…..See working in a 105 F heat down in North Mexico:
Maquilladores factories right to the US border, heat of 105 F is standard
for several month……At the border town at Laredo, you burn yourself at
metal door handles…. the tarmac bubbles at Mall parking lots….with closed
eyes, you can feel the heat radiating iron lamp posts on the sidewalk to a 2
meter distance……
…but life goes on normal without whining, as done by the Boston know-it-all
freeze-bags….
If heat were an economic setback, then there would not exist a thriving supply
industry to the US in Northern Mexico….have a look yourself….
JS
http://www.kellogg.northwestern.edu/faculty/jones-ben/htm/climatechange.pdf
See graphs last page where you can read abreviated names of countries “rich” and “poor”.
Cherry picked. Big time. Fail.
No poor countries with temperate climates that can stand to improve by being a little warmer. China comes to mind. Probably more people in China than the total population in the cherry picked list of poor countries.
Rich countries are cherry picked too. Mexico is a rich country? Really? On average from 1950-2005? Study period ends safely this side of the biggest financial downturn in 80 years. I wonder how the study ends if the so-called rich countries are studied after the financial crisis got wound up in 2007 and continued through today?
Fail fail fail
Chris Long wrote:
No, they haven’t factored those in because there is no evidence of wintertime warming. The winter of 2011-12 was exceptionally cold in Europe, as were the winters of 2009-10 & 2010-11 in North America.
No paywall, August 2011 version
http://www.kellogg.northwestern.edu/faculty/jones-ben/htm/climatechange.pdf
This researcher was aghast that “no one had done it before”? Are you joking????? No one has studied the cost affects of excessive heat and drought? It is a wonder farmers have farms past the initial 5 years in business. Just a wonder I tell ya. Must be just stupid beginners luck if the farm lasts past the first dry summer. And century farms must only be a figment of our imagination.
WTD research (aka Wasted Tax Dollars). Studying what we already know.
We only have to look at one country to show this is nothing but BS. Zimbabwe (Rhodesia) before Mugabe was a food exporter. Zimbabwe with Mugabe is starving. It has nothing to do with weather or climate. It was all due to Mugabe and his policies. And the third world is full of other examples where a regime change, and the regime change only, resulted in severe economic downturns.
Jay Davis
I was told so many years ago, that the USA South would rise as an economic powerhouse with the introduction of electricity and its correlate, air conditioning. Air conditioning of buildings for the central cities like Atlanta allowed banking, office work, and industrialization amongst a cheap labor force. Rural electrification, whereby electric horse power was substituted for hand, back and manure producing horse power, reduced the number of rural workers, and their kin migrated to the cities, finding: jobs, education, public health (water and sewer), health care including dentistry & maternity care, and a generally upward mobility.
Adaptation in the developing world, it seems to me, requires cheap and abundant electricity. Hmmm, where can we find such a miracle?
I’m rather sceptical™ that we see much difference in productivity between 104℉ and 105℉
I’m further concerned about how many existing factories currently operate at 104℉.
Even if I cast aside my doubts, 1℉ at a rate of 0.1℉ per decade will take 100 years.
Exactly how badly should we trash the world economy to prevent a 1.3% loss in productivity over a 100 year period?
“..the study finds that every 1-degree-Celsius increase in a poor country, over the course of a given year.” First of all, one year is weather not climate so if they are addressing climate change I think 10 years should be a minimum time period to study.
What region of the world are we talking about for developing countries? Most are in the low latitudes and experience the least change in average temperature either way, (the most is at the poles right?). Show me the low latitude country that has ever seen warming (or cooling) at 10 degrees per decade – …and I’ll EAT IT!
Where would one find a temperature history of say Guatemala?
What about the economic cost of climate alarmism?
I’ll need to control myself here. Have they controlled for kleptocacy? Some parts of Asia have moved forward (despite rising temperatures) since the 1950s. Parts of South America also seem to be doing well recently. My reading is The Rule of Law is a better measure of economic success than temperature.
I may be wrong, but my feeling is that the poor nations which invest in society do better than those whose leaders loot the economy for personal gain.
MOST (about 2/3 or more) of the “supposed” average temperature increase in the last 50 years has been attributed to less cool nights and winters, not increased daytime highs. The latest information also tends to support that the increase is even less than previously thought over the last century (from bad long term record adjustments). Thus average daytime highs are, at most a SMALL fraction of 1 C (probably < 0.2 C) hotter recently than average over the last century. This is not exactly a large effect. Further, drought has been shown to be not unusual compared to even droughts in 1980 and 1988, and far less than the 1930's. However, the increased CO2 content has clearly caused better crop outcomes than otherwise, including better drought resistance. Saying that there is a cost of the warming is nonsense.
On top of the comments already left, something else that comes to mind.
I wonder whether the study used daytime max temps or the average day/night (high/low) temps? Because the various average temperature records seem to indicate a much faster increase of min temps than max, yet if they’re discussing 105F in a factory it’s obvious that they’re thinking of daytime temps.
Really you do have to wonder whether any of the peer reviewers stopped to think about this paper at all. But of course the conclusion is just what IPCC needs for its forthcoming AR5 so all thinking must be suspended until further notice. It’s hardly surprising we’ve seen such a spate of flawed pseudoscience being published over the last few weeks — perfect grist for the IPCC mill.
Matthew W says:
August 7, 2012 at 9:56 am
“Didn’t “cold” lead to the French Revolution ?”
Yep! Eaten’ their own young to stay alive…Donner Pass Syndrome?
Major FAIL. Control for latitude and altitude and see what happens.