No matter how it is measured, income declines with global warming

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

The contemporaneous relationship between temperature and income is important because it enables economists to estimate the economic impact of global warming without assuming a structural model. Until recently, empirical evidence generally suggests that there is a negative relationship between temperature and income, and, therefore, global warming has an adverse impact on economic activity. However, Nordhaus (2006) argues that the temperature-income relationship depends on how income is measured. We show in this paper that the results of Nordhaus (2006) may be due to an omitted-variable problem. Based on a well-motivated temperature-income model, we find that the relationship between temperature and income is not dependent on income measurement. Our regression results show that the adverse impact of an increase of 1. °C in temperature can be as much as a 3% decrease in total income for the G-7 nations. Therefore, our results suggest an aggressive climate mitigation policy.

Original languageEnglish (US)
Pages (from-to)963-970
Number of pages8
JournalEcological Economics
Volume70
Issue number5
DOIs
StatePublished - Mar 15 2011

Fingerprint

global warming
income
temperature
Global warming
Income
economic impact
economic activity
Temperature
mitigation
climate

Keywords

  • Global warming
  • Income
  • Quantile regression
  • Temperature

ASJC Scopus subject areas

  • Economics and Econometrics
  • Environmental Science(all)

Cite this

No matter how it is measured, income declines with global warming. / Ng, Pin T; Zhao, Xiaobing.

In: Ecological Economics, Vol. 70, No. 5, 15.03.2011, p. 963-970.

Research output: Contribution to journalArticle

@article{814ed82ef5b14293abf391770068f79e,
title = "No matter how it is measured, income declines with global warming",
abstract = "The contemporaneous relationship between temperature and income is important because it enables economists to estimate the economic impact of global warming without assuming a structural model. Until recently, empirical evidence generally suggests that there is a negative relationship between temperature and income, and, therefore, global warming has an adverse impact on economic activity. However, Nordhaus (2006) argues that the temperature-income relationship depends on how income is measured. We show in this paper that the results of Nordhaus (2006) may be due to an omitted-variable problem. Based on a well-motivated temperature-income model, we find that the relationship between temperature and income is not dependent on income measurement. Our regression results show that the adverse impact of an increase of 1. °C in temperature can be as much as a 3{\%} decrease in total income for the G-7 nations. Therefore, our results suggest an aggressive climate mitigation policy.",
keywords = "Global warming, Income, Quantile regression, Temperature",
author = "Ng, {Pin T} and Xiaobing Zhao",
year = "2011",
month = "3",
day = "15",
doi = "10.1016/j.ecolecon.2010.12.012",
language = "English (US)",
volume = "70",
pages = "963--970",
journal = "Ecological Economics",
issn = "0921-8009",
publisher = "Elsevier",
number = "5",

}

TY - JOUR

T1 - No matter how it is measured, income declines with global warming

AU - Ng, Pin T

AU - Zhao, Xiaobing

PY - 2011/3/15

Y1 - 2011/3/15

N2 - The contemporaneous relationship between temperature and income is important because it enables economists to estimate the economic impact of global warming without assuming a structural model. Until recently, empirical evidence generally suggests that there is a negative relationship between temperature and income, and, therefore, global warming has an adverse impact on economic activity. However, Nordhaus (2006) argues that the temperature-income relationship depends on how income is measured. We show in this paper that the results of Nordhaus (2006) may be due to an omitted-variable problem. Based on a well-motivated temperature-income model, we find that the relationship between temperature and income is not dependent on income measurement. Our regression results show that the adverse impact of an increase of 1. °C in temperature can be as much as a 3% decrease in total income for the G-7 nations. Therefore, our results suggest an aggressive climate mitigation policy.

AB - The contemporaneous relationship between temperature and income is important because it enables economists to estimate the economic impact of global warming without assuming a structural model. Until recently, empirical evidence generally suggests that there is a negative relationship between temperature and income, and, therefore, global warming has an adverse impact on economic activity. However, Nordhaus (2006) argues that the temperature-income relationship depends on how income is measured. We show in this paper that the results of Nordhaus (2006) may be due to an omitted-variable problem. Based on a well-motivated temperature-income model, we find that the relationship between temperature and income is not dependent on income measurement. Our regression results show that the adverse impact of an increase of 1. °C in temperature can be as much as a 3% decrease in total income for the G-7 nations. Therefore, our results suggest an aggressive climate mitigation policy.

KW - Global warming

KW - Income

KW - Quantile regression

KW - Temperature

UR - http://www.scopus.com/inward/record.url?scp=79952069307&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=79952069307&partnerID=8YFLogxK

U2 - 10.1016/j.ecolecon.2010.12.012

DO - 10.1016/j.ecolecon.2010.12.012

M3 - Article

AN - SCOPUS:79952069307

VL - 70

SP - 963

EP - 970

JO - Ecological Economics

JF - Ecological Economics

SN - 0921-8009

IS - 5

ER -