William Nordhaus

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William Nordhaus
William Nordhaus EM1B6043 (46234132921).jpg
Nordhaus in Stockholm, December 2018
Born
William Dawbney Nordhaus

(1941-05-31) May 31, 1941 (age 79)[1]
EducationYale University (B.A., M.A.)
Sciences Po
Massachusetts Institute of Technology (Ph.D.)
AwardsBBVA Foundation Frontiers of Knowledge Award (2017)
Nobel Memorial Prize in Economic Sciences (2018)
Scientific career
FieldsEnvironmental economics
InstitutionsYale University
ThesisA theory of endogenous technological change (1967)
Doctoral advisorRobert Solow[2]

William Dawbney Nordhaus (born May 31, 1941) is an American economist, a Sterling Professor of Economics at Yale University, best known for his work in economic modeling and climate change, and one of the 2 recipients of the 2018 Nobel Memorial Prize in Economic Sciences.[3] Nordhaus received the prize "for integrating climate change into long-run macroeconomic analysis".[4]

Education and career[edit]

Nordhaus was born in Albuquerque, New Mexico, the son of Virginia (Riggs) and Robert J. Nordhaus,[5] who co-founded the Sandia Peak Tramway.[6][7] Robert J. Nordhaus was from a German Jewish family — his father Max Nordhaus (1865–1936) immigrated from Paderborn in 1883 and was a manager of The Charles Ilfeld Company branch in Albuquerque.[8][9]

Nordhaus graduated from Phillips Academy in Andover and subsequently received his BA and MA from Yale in 1963 and 1973, respectively, where he was a member of Skull and Bones.[10] He also holds a Certificate from the Institut d'Etudes Politiques (1962) and a PhD from MIT (1967).[11][10][12] He was a Visiting Fellow of Clare Hall, Cambridge in 1970-1971. He has been a member of the faculty at Yale since 1967, in both the Economics department and the School of Forestry and Environmental Studies,[13][12] and has also served as its Provost from 1986–1988 and its Vice President for Finance and Administration from 1992–1993. His tenure as provost was among the shortest in the university's history. He has been on the Brookings Panel on Economic Activity since 1972. During the Carter administration, from 1977–1979, Nordhaus was a member of the Council of Economic Advisers.[12] Nordhaus served as the chairman of the Board of Directors of the Boston Federal Reserve Bank between 2014 and 2015.[14]

Nordhaus lives in New Haven, Connecticut, with his wife, Barbara, a social worker in the Yale Child Study Center.[12]

Contributions to economics and the study of climate change[edit]

Nordhaus is the author or editor of over 20 books. One of his early works, he partnered with Paul Samuelson as a co-author for an introductory textbook entitled Economics. Nordhaus worked alongside Samuelson from the 12th edition until the 19th, starting in 1985.[15][16] It was first published in 1948 and has appeared in nineteen different editions and seventeen different languages. It was known as a best-selling economics textbook for decades and is still extremely popular today. Economics was called a “canonical textbook”, and the development of mainstream economic thought has been traced by comparing the fourteen editions under Samuelson’s editing.

He has also written several books on global warming and climate change, one of his primary areas of research. Those books include Managing the Global Commons: The Economics of Climate Change (1994), which won the 2006 Award for "Publication of Enduring Quality" from the Association of Environmental and Resource Economics. Another book, with Joseph Boyer, is Warming the World: Economic Models of Global Warming (2000). His most recent book is The Climate Casino: Risk, Uncertainty, and Economics for a Warming World.[17]

In 1972 Nordhaus, along with fellow Yale economics professor James Tobin, published Is Growth Obsolete?,[18] an article that introduced the Measure of Economic Welfare (Index of Sustainable Economic Welfare) as the first model for economic sustainability assessment.

Nordhaus is also known for his critique of current measures of national income. He wrote, "If we are to obtain accurate estimates of the growth of real incomes over the last century, we must somehow construct price indexes that account for the vast changes in the quality and range of goods and services that we consume, that somehow compare the services of horse with automobile, of Pony Express with facsimile machine, of carbon paper with photocopier, of dark and lonely nights with nights spent watching television, and of brain surgery with magnetic resonance imaging" (1997, 30).[19]

Palda summarizes the importance of Nordhaus's insight as follows: "The practical lesson to be drawn from this fascinating study of lighting is that the way we measure the consumer price index is severely flawed. Instead of putting goods and their prices directly into the index we should reduce all goods to their constituent characteristics. Then we should evaluate how these goods can best be combined to minimize the cost of consuming these characteristics. Such an approach would allow us to include new goods in the consumer price index without worrying about whether the index of today is comparable to that of ten years ago when the good did not exist. Such an approach would also allow governments to more precisely calculate the rate at which welfare and other forms of aid should be increased. At present, such calculations tend to overestimate the cost of living because they do not take into account the manner in which increases in quality reduce the monetary cost of maintaining a certain standard of living."[20]

Contributions on economics of climate change[edit]

Nordhaus has written on the economics of climate change. He is the developer of the DICE and RICE models, integrated assessment models of the interplay between economics, energy use, and climate change.

A Question of Balance: Weighing the Options on Global Warming Policies ISBN 978-0-300-13748-4 was published by Yale University Press on June 24, 2008.

In Reflections on the Economics of Climate Change (1993), he states: "Mankind is playing dice with the natural environment through a multitude of interventions – injecting into the atmosphere trace gases like the greenhouse gases or ozone-depleting chemicals, engineering massive land-use changes such as deforestation, depleting multitudes of species in their natural habitats even while creating transgenic ones in the laboratory, and accumulating sufficient nuclear weapons to destroy human civilizations."[21] Under the climate change models he has developed, in general those sectors of the economy that depend heavily on unmanaged ecosystems – that is, are heavily dependent upon naturally occurring rainfall, runoff, or temperatures – will be most sensitive to climate change. Agriculture, forestry, outdoor recreation, and coastal activities fall in this category."[22] Nordhaus takes seriously the potentially catastrophic impacts of climate change.[23]

In 2007, Nordhaus, who has done several studies on the economics of global warming, criticized the Stern Review for its use of a low discount rate:[24]

The Review's unambiguous conclusions about the need for extreme immediate action will not survive the substitution of discounting assumptions that are consistent with today's market place. So the central questions about global-warming policy – how much, how fast, and how costly – remain open. The Review informs but does not answer these fundamental questions.

In 2013, Nordhaus chaired a committee of the National Research Council that produced a report discounting the impact of fossil fuel subsidies on greenhouse gas emissions.[25]

In a January 2020 interview with Neue Zürcher Zeitung, Nordhaus claimed that achieving the 2°C goal of the Paris agreement was "impossible", stating that "even if we make the fastest possible turn towards zero emissions, CO2 will continue to accumulate in the atmosphere, because we cannot simply shut down our economy". He asserted that he was not alone in making this assessment, claiming that half of the simulation arrived at the same conclusion. He also remarked that the two-degree target was set without asking about the cost of meeting it.[26][27]

Honors[edit]

Scientific and engineering academies[edit]

Among many honors, he is a Member of the United States National Academy of Sciences and an Elected Fellow of the American Academy of Arts and Sciences.[12] He has been a foreign member of the Royal Swedish Academy of Engineering Sciences since 1999.

American Economic Association[edit]

In 2004, Nordhaus was designated a Distinguished Fellow of the American Economic Association (AEA), along with George P. Shultz and William A. Brock.[28] The accompanying AEA statement referred to his "knack for asking large questions about the measurement of economic growth and well-being, and addressing them with simple but creative insights," among them, his pioneering work on the political business cycle,[29] ways of using national income accounts data to devise economic measures reflecting better health, increases in leisure and life expectancy, and "constructing integrated economic and scientific models to determine the efficient path for coping with climate change".[30] In 2013, Nordhaus became president-elect of the AEA, and served as the association's president between 2014 and 2015.[31][14]

Nobel Memorial Prize in Economics[edit]

Nordhaus was awarded the Nobel Memorial Prize in Economic Sciences in 2018, which he shared with Paul Romer.[14] In detailing its reasons for giving the prize to Nordhaus, the Royal Swedish Academy of Sciences specifically recognized his efforts to develop "an integrated assessment model, i.e. a quantitative model that describes the global interplay between the economy and the climate. His model integrates theories and empirical results from physics, chemistry and economics. Nordhaus' model is now widely spread and is used to simulate how the economy and the climate co-evolve."[4]

Many of the news outlets that reported on Nordhaus's prize noted that he was in the advance wave of economists who embraced a carbon tax as a preferred method of carbon pricing.[32][33] Some climate scientists and commentators were disappointed with the Nobel Prize going to Nordhaus due to his embrace of substantially lower carbon taxes per ton than most scientists, along with his past history of minimal carbon taxes.[34]

Criticisms[edit]

Economist Steve Keen has severely criticized Nordhaus work[35] and said that his claim that a 4°C increase in global temperature over pre-industrial levels is only going to reduce GDP per capita by between 2% and 4% is nonsense. Keen disagrees that Nordhaus's "Damage Function" should be a quadratic equation. To demonstrate this he says that since his damage function is symmetrical "it predicts precisely the same level of damage to GDP from a fall of, for example, 4°C in the global average temperature, as it does for a rise of 4°C." If we try to apply the function to a period we had 20,000 years ago, during the last Ice Age, where countries like Canada, Ireland, Scotland, northern Germany, Poland, Denmark, Norway, and Sweden were under a kilometer or more of ice, the function would also estimate a reduction of GDP by 2% and 4%.[36]

Others have also pointed out that climate scientists and ecologists have a very negative opinion of Nordhaus. Dr. Jason Hickel, who researches ecological economics, writes that "Many believe that the failure of the world’s governments to pursue aggressive climate action over the past few decades is in large part due to arguments that Nordhaus has advanced." One of his criticisms is that Nordhaus uses a very high discount rate which allows him to argue that we shouldn’t reduce emissions too quickly, because the economic cost to people today will be higher than the benefit of protecting people in the future.[37]

Most climate scientists assume non-linear impacts.[38]

Publications[edit]

References[edit]

  1. ^ Biographical Directory of the Council of Economic Advisers - Council of Economic Advisers (U.S.). Council of Economic Advisers (U.S. March 13, 2007. p. 171. ISBN 9780313225543. Retrieved October 11, 2018.
  2. ^ "PDS SSO". library.mit.edu.
  3. ^ Appelbaum, Binyamin (October 8, 2018). "2018 Nobel in Economics Awarded to William Nordhaus and Paul Romer". The New York Times.
  4. ^ a b "The Prize in Economic Sciences 2018" (PDF) (Press release). Royal Swedish Academy of Sciences. October 8, 2018.
  5. ^ "Albuquerque Journal Obituaries". obits.abqjournal.com.
  6. ^ "Brothers Battle Climate Change on Two Fronts".
  7. ^ "Sandia Peak Ski & Tramway - History & Technology". sandiapeak.com.
  8. ^ Nuzzo, Regina (June 27, 2006). "Profile of William D. Nordhaus". Proceedings of the National Academy of Sciences. 103 (26): 9753–9755. Bibcode:2006PNAS..103.9753N. doi:10.1073/pnas.0601306103. PMC 1502525. PMID 16803963.
  9. ^ Rochlin, Harriet; Rochlin, Fred (October 9, 2018). Pioneer Jews: A New Life in the Far West. Houghton Mifflin Harcourt. ISBN 978-0618001965 – via Google Books.
  10. ^ a b "William Dawbney Nordhaus Will Marry Barbara Feise". Retrieved October 8, 2018.
  11. ^ Nordhaus, William Dawbney (1967). A theory of endogenous technological change (Ph.D.). Massachusetts Institute of Technology. OCLC 24679365 – via ProQuest.
  12. ^ a b c d e "William D. Nordhaus". economics.yale.edu. Yale Department of Economics. Retrieved October 8, 2018.
  13. ^ Harris, Richard (February 11, 2014). "Economist Says Best Climate Fix A Tough Sell, But Worth It". Washington, D.C.: National Public Radio. Retrieved October 1, 2017.
  14. ^ a b c "Yale's William Nordhaus wins 2018 Nobel Prize in Economic Sciences". YaleNews. October 8, 2018. Retrieved October 8, 2018.
  15. ^ Samuelson, Paul A.; McGraw, Harold W.; Nordhaus, William D.; Ashenfelter, Orley; Solow, Robert M.; Fischer, Stanley (undefined NaN). "Samuelson's "Economics" at Fifty: Remarks on the Occasion of the Anniversary of Publication". The Journal of Economic Education. 30 (4): 352. doi:10.2307/1182949. JSTOR 1182949. Check date values in: |date= (help)
  16. ^ Economics. 2009.
  17. ^ William D. Nordhaus (October 22, 2013). The Climate Casino: Risk, Uncertainty, and Economics for a Warming World. Yale University Press. ISBN 978-0-300-18977-3.
  18. ^ "Is Growth Obsolete? William Nordhaus and James Tobin, Yale University (Link)" (PDF).
  19. ^ Nordhaus, William D. 1997. "Do Real Output and Real Wage Measures Capture Reality? The History of Light Suggests Not." The Economics of New Goods. Edited by Robert J. Gordon and Timothy F. Bresnahan. University of Chicago Press for the National Bureau of Economic Research. 27-70.
  20. ^ Palda, Filip (2013). The Apprentice Economist: Seven Steps to Mastery. Cooper-Wolfling Press. ISBN 978-0987788047
  21. ^ Nordhaus, W. D. '"Reflections on the economics of climate change", Journal of Economic Perspectives (1993); 7(4) 11–25 at p. 11
  22. ^ Nordhaus, W. D. '"Reflections on the economics of climate change", Journal of Economic Perspectives (1993); 7(4) 11–25 at p. 15
  23. ^ Nordhaus WD (November 1992). "An Optimal Transition Path for Controlling Greenhouse Gases" (PDF). Science. 258 (5086): 1315–1319. Bibcode:1992Sci...258.1315N. doi:10.1126/science.258.5086.1315. PMID 17778354. S2CID 23232493.
  24. ^ Nordhaus, William (May 3, 2007). "The Stern Review on the Economics of Climate Change" (PDF). Yale University.
  25. ^ "U.S. Tax Code Has Minimal Effect on Carbon Dioxide and Other Greenhouse Gas Emissions, Report Says". National Academies. Retrieved July 7, 2015.
  26. ^ "Global warming goals impossible, Nobel laureate tells Swiss paper". Swissinfo. January 26, 2020. Retrieved January 27, 2020.
  27. ^ Voigt, Birgit; Meier, Jürg (January 25, 2020). "Nobelpreisträger Nordhaus: Wir erreichen das 2-Grad-Ziel nicht". Neue Zürcher Zeitung. Retrieved January 27, 2020.
  28. ^ American Economic Association "Distinguished Fellows".
  29. ^ • William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, 42(2), pp. 169-190.
       • _____, 1989:2. "Alternative Approaches to the Political Business Cycle," Brookings Papers on Economic Activity, p. p. 1-68.
  30. ^ American Economic Association, 2004. "William D. Nordhaus, Distinguished Fellow".
  31. ^ "American Economic Association". aeaweb.org.
  32. ^ Strauss, Delphine (October 8, 2018). "Economics Nobel recognises work on climate change and innovation: William Nordhaus and Paul Romer showed how to achieve sustained and sustainable growth". Financial Times. Mr Nordhaus was an early advocate of carbon taxes, but the committee noted that the models he developed also allowed policymakers to calculate quantitative paths for the best tax showing how they would depend on [assumptions regarding the values of disparate climate and economic variables].
  33. ^ Appelbaum, Binyamin (October 8, 2018). "2018 Nobel in Economics Awarded to William Nordhaus and Paul Romer". The New York Times. The Yale economist William D. Nordhaus has spent the better part of four decades trying to persuade governments to address climate change, preferably by imposing a tax on carbon emissions. His careful work has long since convinced most members of his own profession . ...
  34. ^ Linden, Eugene (October 25, 2018). "The economics Nobel went to a guy who enabled climate change denial and delay". latimes.com. Retrieved October 31, 2018.
  35. ^ "The appallingly bad neoclassical economics of climate change?".
  36. ^ "Climate Change: Extinction or Adaptation?".
  37. ^ "The Nobel Prize for Climate Catastrophe".
  38. ^ Friedrich, Tobias; Timmermann, Axel; Tigchelaar, Michelle; Elison Timm, Oliver; Ganopolski, Andrey (2016). "Nonlinear climate sensitivity and its implications for future greenhouse warming". Science Advances. 2 (11): e1501923. Bibcode:2016SciA....2E1923F. doi:10.1126/sciadv.1501923. PMC 5569956. PMID 28861462.

Further reading[edit]

External links[edit]

Academic offices
Preceded by
Claudia Goldin
President of the American Economic Association
2014– 2015
Succeeded by
Richard Thaler