Monday, December 10, 2018

Three Surprises About Nobel Laureate Nordhaus’s Model of Climate Change

By Robert Murphy. Excerpt:

William Nordhaus is a pioneer in the economics of climate change, who arguably invented the discipline in its modern form. His so-called DICE model of the global economy and climate system is state-of-the-art, and was one of three selected by the Obama Administration to estimate the “social cost of carbon.” In recognition of his accomplishments, Nordhaus was one of this year’s Nobel laureates in economics.

Despite his prestige, Nordhaus’s model has serious shortcomings, as I documented in The Independent Review in 2009. Looking back, there are three surprising facts about Nordhaus’s model that are relevant to today’s policy debate:

First, Nordhaus shows that aggressive mitigation policies can be a cure worse than the disease, and he specifically included the United Nation’s latest goal in his examples of such misguided goals. Second, Nordhaus’s estimate of the optimal carbon tax (for the year 2025, for example) has almost tripled in less than a decade. Third, far from being tied to specific analyses of particular threats, Nordhaus’ global damage estimate was largely driven by a simple survey of experts, and this figure was furthermore manipulated arbitrarily by Nordhaus in light of new developments. The public would be very surprised to learn just how crude the “settled science” underlying various proposals to limit climate change really is."

Female employees earn lower wages if their supervisor is also a woman

See Same-Sex Employees and Supervisors: The Effect of Homophily and Group Composition on Wage Differences by Christina Klug.


This article analyzes wage differences according to whether or not employees and their supervisors are of the same sex. The mechanism of homophily predicts that having supervisors of the same sex has a positive effect on wages. Additionally, we introduce four conflicting theories that consider group composition as a moderating factor. The hypotheses are tested with data from the Bavarian Graduate Panel via fixed-effect panel regressions. Results show that relative group sizes must be considered in order to see wage differences. These wage benefits emerge in minority and majority groups for male academics, but women earn less in majority groups when their supervisor is of the same sex."