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
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
Hasn’t most of the warming been in the winters in northern latitudes? Aren’t most of the poor countries in the tropics where there hasn’t been much warming if any? So the aurhors are saying that when a country in the north warms a bit in winter the productivity of a country near the equator goes down. Yep, that makers sense to me. /sarc
Try growing any crop when the daytime highs do not hit 70 F.
The last sentence of the abstract sums it up nicely.
“These findings inform debates over climate’s role in economic development and suggest the possibility of substantial negative impacts of higher temperatures on poor countries.”
The findings only suggest the possibility of something. They can’t really inform the debate because they only suggest a possibility.
All the commentary about temperature doing this or temperature doing that, and the silly analogies, are just wild conjecture with no supporting evidence. Adding injury to insult, the paper is hidden behind a pay wall, and the raw data are probably even better hidden.
dT
geography lady says:
August 7, 2012 at 11:49 am
….Many lesser developed countries don’t have much of a stable middle class. The despots don’t want a better educated, middle class. They would lose their “office”.
_________________________
That is the general idea for ALL countries now a days it seems. Just enough education to be useful in a factory but not enough to think. See Dumbing Down America by Dr. Samuel Blumenfeld. The other move by governments is to install so much regulation a middle class entrepreneurship is impossible and everyone is a lawbreaker so they keep a low profile.
(Also see Red Tape Rising: A 2011 Mid-Year Report “Many people may think that regulatory costs are a business problem. Indeed, they are, but the costs of regulation are inevitably passed on to consumers in the form of higher prices and limited product choices.”
Thanks a lot, Gail, your refs were invaluable….the
best for years….on economy and spirit of society…Many
questions now solved….JS, this helped.
George E. Smith had some very good articles on this subject that blows this study out of the water. It is cold that produces famine and the fall of civilizations and it is very well documented. Looks like “inconvienient” history is being rewritten again by the ‘politically connected Academic’™
Of Time and Temperatures: http://chiefio.wordpress.com/2011/03/03/of-time-and-temperatures/
Dry China: http://chiefio.wordpress.com/tag/bond-event/
Intermediate Period Half Bond Events: http://chiefio.wordpress.com/2011/02/22/intermediate-period-half-bond-events/
8.2 Kiloyear Event and You: http://chiefio.wordpress.com/2011/12/13/8-2-kiloyear-event-and-you/
“””””…..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……”””””
So tell us; over the last half-century just how many of those 1-degree Celsius increases have been plotted in the course of a given year, in any country; poor or rich. I thought we hadn’t yet seen a single 1-degree increase in the whole time that records have been kept, anywhere on earth, so I’m sure that the statistics of this study’s data must be a total crap shoot.
So in any one year, just how did they compare the economic growth for the same yea,r same country, both with and without the 1-degree increase during the year.
Can you do instant re-runs of a year to see what wuold happen if you did it all over again ?
Joachim Seifert says:
August 7, 2012 at 12:19 pm
Someone really gets his PhD with this nonsense?
_____________________
A certain person got his PhD with a broken Hockey Stick. (If I recall correctly)
This seems to be the new state of affairs in Post Normal Science.
Romney was at the center of this issue recently when he commented that Israelis had succeeded in the Middle East due to their culture. Because the comment implicitly suggested a contrast with Arab cultures, he was branded a racist. I don’t know how well he acquitted himself in rebutting these criticisms, but I tend to agree with his premise, that certain cultures promote attitudes which will prevail in difficult circumstances.
Richard Landes: Romney Is Right on Culture and the Wealth of Nations
online.wsj.com/article
/SB10000872396390443866404577566770697427382.html?mod=googlenews_wsj#articleTabs%3Darticle
So…. based on this study, the warmist years on record, based on the frequency and magnitude of regime change and poltiical strife ought to have been
3. 1989 to 1991, fall of the Soviet Union
2. 1914 to 1918, WW1
1. 1939 to 1845, WW2
Oh wait… 1. and 2. were periods of major economic growth….ooops, counter indicator, so it must have been colder rather than warmer? And 3., post fall of the Soviet Union saw the greatest increase in economic activity in eastern Europe and Russia in modern history, suggesting that it must have been cooler then…. ooops it wasn’t, that’s about when temps peaked….
This is perception management. Anyone who takes a few moments to think it through will see right through this paper. It is aimed at those who read the headline, absorb it, and move on.
That must place the Inuit as world leaders in economic growth.
I found an even better correlation… First I wanted to prove that drinking water causes cancer. Then I did a regression analysis and found out that 100% of people who have cancer drank water at some time in their lives. Therefore, the correlation is certain that drinking water must have caused the cancer.
I did another study that found out, we could reduce the number of deaths of bridge jumpers by getting rid of those pesky things that cross rivers. Imagine the lives we’d save.
and why not save more lives by getting rid of windows in buildings higher than 1 story…. and while we are at it, let’s get rid of automobiles. They are so dangerous.
Owen in Ga says: Biodiversity has always been greater in climate optimums and the golden ages of the past civilizations all occurred during the warmest periods of the Holocene. They need to look at history, archaeology and geology if they want to see the “economic effects of climate change”!
kirkmyers says: 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.
eyesonu says: 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?
Jim says: 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!
Hey the four of you above have the right info–now get the references and write a position paper and submit it the same journal (or here). It totally destroys their work!
Bill Parsons: thanks for the Indur Goklany articles–No one has thought to do this before?????
son of mulder: I followed the links, thanks! really facinating.
Sad day when Haiti’s GDP growth outranks ours! I did notice tha many countries that have gone the “socialist” route int ehir economies have little to no GDP growth right now. I wonder why?
Haiti 6.1%
Kosovo 5.3 %
Turkmenistan 9.9%
Mongolia 11.5 %
United States 1.5 %
JamesS, this was teh funniest comment yet–I laughed outloud–thanks!
Or would the output curve really be relatively flat from say, room temperature to 90 F, then a very steep drop in productivity up to maybe 100 F, then mostly flat again up to where people burst into flames at their workstations?
@highflight56433
In Australia, Union members love it when it gets hot (usually above 34.5 C ish) because they get to return to the depot and sit in the air conditioning or if it gets even hotter to go home. One of the largest Unions here has also invested the union super funds heavily into AGW schemes and technologies so another reason to keep it hot and keep the AGW movement alive. This is also one of the reasons that Australia will be the last holdout in this fantasy.
From the paper
“This paper takes an alternative approach. We first construct temperature and precipitation data for each country and year in the world from 1950 to 2003 and combine this dataset with data on aggregate output. We then examine the historical relationship between changes in a country’s temperature and precipitation and changes in its economic performance. Our main identification strategy uses year-to-year fluctuations in temperature and precipitation to identify their effects.”
Its a curve fit
“By examining aggregate outcomes directly, we avoid relying on a priori assumptions about what mechanisms to include and how they might operate, interact, and aggregate.
Avoid them? They make it sound like this is a plus.
“By utilizing fluctuations in temperature, we isolate its effects from time-invariant country characteristics. Our approach also allows more nuanced insights.”
Science is hard and establishing causal relationships is very hard. This paper doesn’t appear to even try.
“””””…..Gail Combs says:
August 7, 2012 at 2:31 pm
George E. Smith had some very good articles on this subject that blows this study out of the water. It is cold that produces famine and the fall of civilizations and it is very well documented. Looks like “inconvienient” history is being rewritten again by the ‘politically connected Academic’™…..”””””
Well Gail, I know it is often said that we Smiths have to stand together; but much as I would like to be included in your accolades, I am afraid that E.M. Smith done done this all on his own.
But thanks for the plug anyhow, I don’t mind catching a little wind spray off Cheifio’s backwash.
George
Bill Parsons says:
August 7, 2012 at 4:18 pm
Romney was at the center of this issue recently when he commented that Israelis had succeeded in the Middle East due to their culture….
______________________
I agree with him because that society has always had a high regard for learning and it has paid off in dividends in the science, technology and industry they have brought to their land.
So why in heck is it considered “racist” to acknowledge another people’s ingenuity and energy? The facts speak for themselves and acknowledging them should not have called for abuse by the MSM unless of course it is only the parasites, the gimmes, the conmen, the criminals, the terrorists and destroyers the MSM holds in high esteem.
Perhaps the worst part of this twisted “morality” on the part of the MSM is if you do not publicly praise what is best in society how will our young know what to strive for and emulate?
This sounds like a version of the theory I heard from fellow-student Peggy Tong (an absolutely gorgeous Malaysian girl whom I totally failed to get off with) when I was an undergraduate in the 60’s. She thought that cooler climates not only encouraged greater physical activity, but also mental activity, and that this contributed to the success of countries in the more moderate climes.
Nice to see that MIT is catching up with Peggy.
“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.”
I am calling BS on this one for a start. Impossible to draw a causation from this.”
I completely agree. Words fail me on how someone can seriously make that leap of logic…just, wow. Political instability has far more to do with the leaders being really bad at their job.
Holy cow, I’m speakless….
eyesonu @ur momisugly August 7, 2012 at 9:53 am
That you Alfred?
Plus one internets to the first to solve my simple puzzle.
Prediction: eyesonu will not solve it.
Reality check says:
August 7, 2012 at 9:39 am
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.
—————-
The problem is the lack of economic growth and cause of their poverty.
In much of the developing regions there are no property rights and corresponding rule of law.
If your enemy has a good crop growing, just go burn it up. There is no force able to protect the people and many in power use their position for personal gain.
Chuck Nolan @ur momisugly August 7, 2012 at 7:14 pm
says
“In much of the developing regions … many in power use their position for personal gain.”
In contradistinction with the developed regions such as the USA and UK where nobody in power would dream of using his position for personal gain.
Congratulations Chuck, top post for unintentional humour that I’ve seen for ages.
With the equator principles in place at most of the big investment banks there is little hope for poor nations to ever see economic growth.
Based on what I have seen in the movies, MIT knows a lot about cheating at the game 21, but not a lot about honesty.
acementhead;
In contradistinction with the developed regions such as the USA and UK where nobody in power would dream of using his position for personal gain.
Congratulations Chuck, top post for unintentional humour that I’ve seen for ages.
>>>>>>>>>>>>>>>>>>>>>
If you cannot distinguish between a country governed by rule of low, within which there are corrupt individuals who are the exception to the rule, and a country which is ruled by corruption from top to bottom, then your handle is well chosen.
low….law…yikes…