William Nordhaus
William Dawbney Nordhaus (born May 31, 1941) is an American economist. He was a Sterling Professor of Economics at Yale University, best known for his work in economic modeling and climate change, and a co-recipient of the 2018 Nobel Memorial Prize in Economic Sciences.[3] Nordhaus received the prize "for integrating climate change into long-run macroeconomic analysis".[4]
William Nordhaus
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) had immigrated from Paderborn in 1883, and became 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 1972, 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 the Environment.[13][12] Nordhaus also served as its Provost from 1986–1988 and its Vice President for Finance and Administration from 1992–1993. 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 was elected to the American Philosophical Society in 2013.[14] He served as the chairman of the board of directors of the Federal Reserve Bank of Boston between 2014 and 2015.[15]
Nordhaus lives in New Haven, Connecticut, with his wife, Barbara, a social worker recently retired from the Yale Child Study Center.[12]
Honors[edit]
Scientific and engineering academies[edit]
Among many honors, he is a Member of the United States National Academy of Sciences, the American Philosophical Society, 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. He was awarded the Daniel Patrick Moynihan Prize by the American Academy of Political and Social Science in 2020.
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.[35] 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,[36] 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".[37] In 2013, Nordhaus became president-elect of the AEA, and served as the association's president between 2014 and 2015.[38][15]
Nobel Memorial Prize in Economics[edit]
Nordhaus was awarded the Nobel Memorial Prize in Economic Sciences in 2018, which he shared with Paul Romer.[15] 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 early wave of economists who embraced a carbon tax as a preferred method of carbon pricing.[39][40] 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 arguing for low carbon taxes.[41]
Evaluations[edit]
The Nobel Foundation described Nordhaus's work as follows: "William Nordhaus’s findings deal with interactions between society, the economy and climate change. In the mid-1990s, he created a quantitative model that describes the global interplay between the economy and the climate. Nordhaus’s model is used to examine the consequences of climate policy interventions, for example carbon taxes." Additionally, the Nobel Prize announcement commented that Nordhaus had “significantly broadened the scope of economic analysis by constructing models that explain how the market economy interacts with nature."[42] In an evaluation of the work, Lint Barrage summarizes its impact, stating that the "body of work also represents science at its best: integrative across disciplines, visionary in scope yet incremental in progress, transparent, and producing knowledge for the benefit of humankind."[43]
Critics of Nordhaus's DICE model focus on several aspects. One of the most important, incorporating political and moral philosophy, is the use of discounting, with an early study by William Cline.[44] Another branch, represented by Robert Pindyck, holds that integrated assessment models cannot capture the complexity of the climate-economy nexus.[45] Nicholas Stern argued that the damage function does not capture many of the most important risks to society.[46] A particularly important critique, developed by Martin Weitzman, is that the economy-climate system may have "fat tails" and therefore inadequately deal with low probability, high consequence outcomes.[47]
In an article by Christopher Ketcham on "theintercept.com"[48] there are a number of critical insights and critical views of Nordhaus' methods and assumptions, which didn't recognise or value tipping-cascades or non-elastic eco and environmental risk.
Post-Keynesian economist Steve Keen criticises the economics of climate change generally and the 2018 work by Nordhaus in particular:
"economists made their own predictions of damages, using three spurious methods: assuming that about 90% of GDP will be unaffected by climate change, because it happens indoors; using the relationship between temperature and GDP today as a proxy for the impact of global warming over time; and using surveys that diluted extreme warnings from scientists with optimistic expectations from economists."
When specifically speaking about Nordhaus, he says that "Nordhaus has misrepresented the scientific literature to justify the using a smooth function to describe the damage to GDP from climate change. Correcting for these errors makes it feasible that the economic damages from climate change are at least an order of magnitude worse than forecast by economists, and may be so great as to threaten the survival of human civilization."[49]
