The Social Cost of Carbon: Garbage In, Garbage Out

Combined climate and econometric computer models produce any desired result.

Ronald Bailey | August 2, 2013

… “In an incisive new study, Massachusetts Institute of Technology economist Robert Pindyck rips the social cost of carbon estimates derived from integrated assessment computer models to pieces. In his National Bureau of Economic Research working paper, “Climate Change Policy: What Do the Models Tell Us?,” Pindyck concludes that the models all “have crucial flaws that make them close to useless as tools for policy analysis: certain inputs such as the discount rate are arbitrary, but have huge effects on the social cost of carbon estimates that models produce.” Pindyck adds that the “models’ descriptions of the impact of climate change are completely ad hoc, with no theoretical or empirical foundation; and the models can tell us nothing about the most important driver of the social cost of carbon, the possibility of a catastrophic climate outcome.”…

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