It turns out that global warming denialist Sinclair Davidson is also a Lancet denialist:
The Carson piece tells us it's impossible to spray 3/4 of the houses in malarial areas. Yet, the Lancet tells us a research team went to every house in Baghdad (at 15 min per house, in the middle of the day, in a war-zone).
And as well as not understanding confidence intervals, Davidson doesn't understand random sampling. In order to estimate the number of deaths in Baghdad you don't have to visit every house, just a random sample of them.
Update: After eight more comments where he accused me of being an apologist for racism and "mass eco-murder", and repeatedly claimed that I lied, Davidson finally admits:
Okay - I thought they visited every house. My bad.
Mind you, despite demonstrating complete ignorance of the study, he is still certain that has been "discredited".
And he's bought the whole denialist package. Look:
In my opinion, eco-mass murder followed the banning of DDT by the US EPA. To date nobody has been prosecuted for this crime.
Who can forget all the people who died in the US after the agricultural (but not the public health) use of DDT was banned there? (That's sarcasm in case Andrew Bolt reads this.)
Did they visit a random sample of houses, or just those where they knew people had died? Or just those near cross roads? The fact of the matter is, we don't know if they sampled randomly or not.
More importantly, how do you know the Lancet study isn't just weapons advertsing?
Can't believe everyting you read, Tim. Let's see what else the Wiki tells us.
opps.
Sinclair Davidson wrote:
Perhaps not, but one thing we absolutely know is that they did not visit [every house in Baghdad](http://catallaxyfiles.com/?p=2865#comment-35256), or even 3/4 of them.
Sinclair,
You wrote that Roberts et al claimed that they visited every house in Baghdad. That was wrong. Please apologise for your grossly inaccurate representation.
Professor Davidson seems to have no concern for his academic credibility as far as I can see...
He seems to think you can choose your conclusions first , and then by a little graph manipulation, and selective quoting, you can give the impression that there is some support for them.
Best to leave that sort of thing to Industry PR guys, who are paid to do such dirty work Professor - that is if you wish to retain credibility as an academic.
Sinclair Davidson: Can't believe everyting you read, Tim. Let's see what else the Wiki tells us.
Oh this is such a lovely find -- a professor who references wikipedia without citing original source material.
Ya' know, for a long time I felt concerned that Roger Pielke Jr.'s nonsense brought shame, not only on himself, but also on the U.S. system of higher education. I think that we are even now, Lambert and Rabbet.
so Davidson seems to have believed that the Lancet study team visited every house in Baghdad. IOW, that they did not do sampling.
And yet, among the major controversies over this study are potential problems with sampling bias - using that word. "Main Street Bias" is the term being used.
Davidson just confessed to having criticised a study when he so little understood it that he didn't know they used a sampling methodology, or that the criticisms involve sampling. IOW, he is arguing from self-confessed near-total ignorance. Why should anyone pay attention to him?
Sinclair [asks](http://scienceblogs.com/deltoid/2007/05/sinclair_davidson_lancet_denia…):
>How do you know the Lancet study isn't just weapons advertising?
Arnold Kling [replies](http://econlog.econlib.org/archives/2007/05/bryan_gets_some_1.html):
>If you want to argue that a particular point of view is correct, do so on the basis of the logic and evidence for that viewpoint.
Sinclair [comments](http://catallaxyfiles.com/?p=2865#comment-35261):
>Great quote.
I would like to point out that Davidson thinks that "oops" is spelled "opps", as shown in his comment above. This completely discredits him. (See? My ability to refute other people is as finely honed and scholarly as Davidson's.)
Zeno: Davidson was right on target despite some carelesness. The Lancet study was a confidence trick, as its baseline data for demographic structure, crude mortality rates, and total population of Iraq pre-invasion in 2003 were all fictitious.
Davidson with Robson was also right about the ineffable Quiggin-Hamilton "petition" on climate change, signed by the 270 Australian economists manifestly even less qualified than Quiggin to teach economics - as Richard Tol famously said of Quiggin's comments on Stern, "pity the poor students of UQ". Here's an example from Quiggin's Blog today, claiming that Alan Oxley's piece in today's Australian shows he does not know the difference between "levels and growth rates" when stating that Stern's costs estimate of avoiding emissions is 1% of GDP, which Oxley rightly said "is a lot" when developed countries rarely achieve even 4% growth p.a. Quiggin has consistently claimed that Stern's 1% is a once and for all one-off cost, when in fact Stern's Review (p.xvi) explicitly states it is 1% of GDP ANNUALY, i.e. now and forever.
Quiggin is right and you are wrong, Tim C. Stern gives the cost as 1% of GDP, not as a 1 percentage point reduction in growth rates as Oxley asserts. Please stay away from arguments about economics in future.
TL: You are the one who neds to stay away from economics, in which you unlike me (M.Sc Econ.)have no qualifications, and even less in maths: a cost of 1% of GDP (say $1 on $100) is the same as the difference between a 3% growth and a 4% growth ie. $4-$3 = $1 everywhere except UQ and UNSW. Stern said the cost is 1% of GDP p.a.; that is a rate, not a level except in JQ's classes
I'm an economic illiterate, however even I can see how wrong tim c is. How embarrassing.
Tim C,, can you really not see the difference between GDP being 1% lower than the BAS case in perpetuity and economic growth being reduced by 1% per annum in perpetuity?
a cost of 1% of GDP (say $1 on $100) is the same as the difference between a 3% growth and a 4% growth
please tell me someone didn't just say that ... oh God he did.
Let's check the scores on the doors after 20 years, shall we?
99 * (1.04^20) = 219.9
100 * (1.03 ^ 20) = 180.6
Ian and dsquared: Stern's cost estimate is 1% of GDP in every year; that means that in year 2 the base is 99 for growth at 3%; in year 2 costs at 1% again reduce the principal at end year 2 for growth in year 3, to $100.95. Growth at 3% pa with BAU to 2050 brings GDP to $356 (from $100 in 2007). Growth at 3% with each year's GDP reduced by emission reduction costs of 1% of GDP brings GDP by 2050 to $229, 64% of the BAU level. Of course for great economists like JQ and TL that is trivial, but I don't find it so. Alan Oxley got it right.
Tim C. got a link and a page reference?
BTW I take it you saw the IPCC report predicting a 0.1% annual reduction in global GDP growth.
From the Stern report:
>For example, if mitigation costs 1% of world GDP by 2100, relative to the hypothetical 'no climate change' baseline, this is equivalent to the growth rate of annual GDP over the period dropping from 2.5% to 2.49%. GDP in 2100 would still be approximately 940% higher than today, as opposed to 950% higher if there were no climate-change to tackle. Alternatively, one can think of annual GDP being 1% lower through time, with the same growth rate, after an initial adjustment. The same level of output is reached around four or five months later than would be the case in the absence of mitigation costs.
Stay away from things involving numbers, Tim C.
To be fair to Tim C, the meaning of the 1% figure wasn't reported very clearly, so I originally made the same mistake. Then I realised that a 1% drop in GDP growth would be an enormous impact, and that economists and businesses would be crying foul - which they weren't (well, not about that anyway).
So I looked at the report and realised my mistake. You can do the same, Tim C - here's the relevant chapter. Tim L's quote above comes from Section 10.4, Understanding the scale of total global costs.
TL: That is exactly the problem with Stern, his formulations change from page to page. I stick with his opening statement, (p.xvi), that the costs of avoiding CC are 1% of GDP per annum (a year for all you possums out there).
I'd stay away from my old nincompoop's (in our Nairobi days in 1971) tripe, TL, if I were you.
Ian: The IPCC there as elsewhere uses words and numbers without regard to their meaning.
Both of you: please show where my numbers are wrong, namely that 1% of GDP assigned to useless non-income earning activities every year does not reduce potential world GDP by 36% by 2050.
To answer your bizarre email, Tim c, I'll say this -
Stern's report states that 1% of the world's GDP be invested, not 1% of each country's GDP as you implied in your earlier comment.
Secondly, Quiggin never stated that this be a one off investment. In one of his critiques of Stern's report, he states -
Not even the most biased analysis of that statement could conclude that he was talking about a 'one off' cost.
Tim Curtin, now that you've been shown to be a math dunce, are you going to threaten legal action "against Tim Lambert and his server" like in the past?
And since I lack your legal expertise, please explain how one brings a lawsuit against a computer. I found some nasty graffiti over the weekend in the bathroom of this bar, and I'm considering legal action against a tile wall.
Tim Curtin's comments (and Davidson's) about the Burnham et al study of mortality in The Lancet is bizarre. Crude mortality rates were calculated by two household surveys and are in line with CIA data. Census data also is standard. Main St bias has been disproven. And too many competent scientists have seen the survey to believe it was not sufficiently random. So it's hard to figure out where the "confidence trick" is. No one, to my knowledge, has questioned these baselines before, and this study has been vetted like few others. It is instructive, too, for all the Lancet deniers---who have yet to make a plausible method critique---to look at other surveys. Among the most interesting is that conducted by the British polling firm, ORB, and published in March. http://www.opinion.co.uk/Newsroom_details.aspx?NewsId=67
Look at Table 3 (pdf version at bottom of link). It says in this random sample of 5000 that 26% of those polled have a family member murdered during the war, and another 12% saying they have a friend murdered. Zounds---that's about 10x the Lancet 2 numbers.
The closer you look, the more plausible the Burnham et al numbers are.
Sorry, I haven't quite cracked including html links in comments. Here's that link to the [Stern report](http://www.hm-treasury.gov.uk/media/8A7/95/Chapter_10_Macroeconomic_mod…) again.
http://www.hm-treasury.gov.uk/media/8A7/95/Chapter_10_Macroeconomic_mod…
From section 10.4:
_... one can think of annual GDP being 1% lower through time, with the same growth rate, after an initial adjustment. The same level of output is reached around four or five months later than would be the case in the absence of mitigation costs._
The clue here is "with the same growth rate". It's clear that Tim C has misinterpreted Stern's figure.
Tim Curtin wrote:
and
Tim C., I'd appreciate it if you'd stop mentioning your economics degree at the same time that you demonstrate how much of a hack you are. It devalues my own degree. Could you maybe pick another field to claim? Thanks.
"That is exactly the problem with Stern, his formulations change from page to page. I stick with his opening statement, (p.xvi), that the costs of avoiding CC are 1% of GDP per annum (a year for all you possums out there)."
Yes we should always treat statements made in the introduction as more reliable than detailed statements in the body of the report.
Tell me Tim,. other than the fact you want it to be true, do you have any reason for standing by the 1% per annum figure?
My above comment makes no sense.
Sorry about that, i'll stay out of future economic discussions :-(
It would be interesting to take Friedman, Keynes, Smith, Krugman, Hayek and Greenspan and all have them get together in a steel cage for a battle to the death.
Well, assuming they were all alive, 20 at the same time, and had been training for the match. No teams, only the last person standing gets out alive.
"Give me another chart, biotch, see how you like that!! Then tell me about the o-rings on the space shuttle!!!!"
...or then again, maybe not.
John Tirman: your citations got it wrong. The facts are:
1.The WHO, which may be supposed to be a more credible source on such matters than the CIA, showed a crude mortality rate for Iraq before the war of 9.1, much higher than the CIA's 5.5. Preferring the latter (I wonder why?) Burnham, Les Roberts & co achieved much higher "excess mortality" from 2003 using the CIA's 5.5 figure than if they had used WHO's.
2.Similarly, the WHO data showed that 41% of deaths in Iraq in 2001 were of children aged 14 and under, while Burnham claims an astonishing reduction to just 17% in 2002.
3.Burnham &co do not offer life tables, showing deaths as % of total in age-group, only deaths by age-group as % of total deaths. There is a difference, although Robert denies that.
4.The WHO estimated total population of Iraq in 2001 at 23.58 million; Burnham et al use 27.139 for mid-2004, implying wholly implausible growth over just 3 years (even 3% pa, unlikely with Iraq's high pre-war infant and child mortality rates, yields only 25.76 by 2004. But the larger figure when used to extroplate "excess deaths" from their sample produces a satisfying (to Burnham et al) larger total of deaths, at a DAILY rate of 1006 by 2005-06 (this figure takes the Burnham excess mortality rate of 14.2 per 1000, or 397,000 deaths for a population of 28 million) from June 2005 through June 06, i.e. 395 days). Despite their best efforts, the failures of either the Sunni to achieve this rate, or of the anti-war media to report it, suggests a degree of ghoulishness in Burnham & co accurately exemplified by Robert et al here.
Tim C. is a Galileo-like genius. He has, with his innumeracy, destroyed the Lancet paper. The world awaits his collection of field data to provide the 'proper' and ideologically correct number.
Best,
D
Ian Gould re Stern:
Here's Alan Oxley: "...assessment by Blair Government economist Nicholas Stern that prices have to be hiked sufficiently to reduce world growth by 1 per cent each year". Stern actually said 1% of income p.a. most of the time in his Review. I know that the 270 Australian economists (notable absentees were McKibbin and Garnaut, notable inclusion was Stephen Keen who cannot by any stretch of the imagination be considered an economist) who signed up to the Quiggin nonsense often think of costs as benefits, but whether we use 33% of income growth or 1% of income on non-productive investments, we will certainly be impoverished.
Dano: the correct number is likely to be less than 100 per day, taking the average reported death toll from car bombs, eg only 40 yesterday. Burnham of course showed sublime indifference to the US' own death toll, ten yesterday. The sooner the Sunni/Shiites desist from their murderous hatred of each other, the sooner the US will leave, but they and you are too stupid to realise that.
The sooner hell freezes over the better will become Tim Curtin's mastery of arithmetics and bombastardry but economics he already has as no man before him.
When dealing with stupid know that Tim Curtin brooks no equal.
Tim Curtin wrote:
Tim C., you know up above when you wrote
and then I asked you to claim a different field than econ? I should've specified both econ and demography. Thanks.
Tim C, let me run this [Stern Review](http://www.hm-treasury.gov.uk/media/8A7/95/Chapter_10_Macroeconomic_mod…) quote past you again.
_one can think of annual GDP being 1% lower through time, with the same growth rate, after an initial adjustment._
In Stern's model, GDP would indeed be 1% lower **in every year** than the BAU case. It's 1% lower in 2050, 1% lower in 2051 ... 1% lower in 2100. After an initial adjustment it tracks the BAU GDP, sitting 1% below it **with the same growth rate**.
I agree that elsewhere in the Stern report it can be hard to interpret the 1% figure, but section 10.4 makes the meaning crystal clear. It's obvious that Stern did not intend to imply that GDP growth would be 1% lower in every year, as you have argued in this thread.
Tim C - do you now accept this?
Not for the first time Lambert has shown here (at #17) that he too is capable of selective quotation: the sentence before the section he quoted is "The numbers involved in stabilising emissions are potentially large in absolute terms - maybe hundreds of billions of dollars annually (1% of current world GDP equates to approximately US$350-400 billion) - but are small (!) in relation to the level (sic) and growth of output".
Stern's error here is once again ignoring opportunity costs. Annual investment of 1% of each year's GDP in a "Future Fund" earning just 5% (less than today's bond rate here) accumulates to US$1,455,475 BILLION by 2100, ignoring any capital gains. The income from the FF in 2100 if drawn then would be US$73,777 billion, which is substantially more than Stern's cost (arising from slower growth @2.49% instead of 2.5%) of just US$3,591 billion in 2100. The income on the FF would be quite enough to pay either for any adaptation to proven climate change damage by then or to compensate those who could show they were suffering from such damage.
Postscript to the final comment in my #33: Before the usual abuse from Dano et al, let me point out that the FF's income from 2100 onwards would be US73.777 Trillion, or 18.55% of GDP in 2100, cf Stern's damage from CC of only 5% of GDP by then.
Tim C - Stern's not talking about investing 1% of each year's growth in combating climate change. [Quoting](http://www.hm-treasury.gov.uk/media/8A7/95/Chapter_10_Macroeconomic_mod…) again:
_the estimated effects of even ambitious climate change policies on economic output are estimated to be small - around 1% or less of national and world product, averaged across the next 50 to 100 years_
The 1% figure is the **average effect** of mitigation measures on annual economic output. It's not the **amount invested** annually in mitigation measures. So the basis for your Future Fund analogy is unsound.
First, let's all give Tim c. a big hand for deflecting the discussion away from Davidson's "every house in Baghdad" howler.
Second: "Stern's error here is once again ignoring opportunity costs." And Tim's error is assuming investments in carbon mitigation are a deadweight loss.
From further on in Oxley's peice:
"China would cut its emissions in half if it replaced all its old power stations with modern generators."
Agree or disagree Tim C.?
Care to speculate on the economic benefits of such a move such as the reduction in health costs and other pollution costs and the reduction in the horrendous annual loss of life in the Chinese coal industry?
While we're at it, ever work out the effect on Australia's GHG emissions of closing Hazelwood and replacing it with a black coal plant in Queensland or the Hunter?
That's what makes this all so difficult.
Let's say the only tax you have in a nation is a VAT and for every $1 the tax is .24 cents. So you are losing 24% of your money. But wait, you're keeping only .76 and giving up .24 and that's 31.6%
So is the tax 24% or 31.6%? Yes.
On the question of opportunity costs. How do you calculate the opportunity costs of putting money into bonds versus using the money to refurbish a coal plant or build a nuclear plant, or research solar power, or farm more efficiently, or drill water wells in Africa, or build carbon scrubbers, or enforce mandated fuel efficiency standards, etc etc etc.... Unless you have a time machine, all you can do is estimate. So who decides which things to do and how much to spend on them?
Ah, China:
http://www.eia.doe.gov/emeu/cabs/chinaenv.html
I missed this thread until quite late. But for the record, the only correct claim made by Tim C above is that he does indeed have the support of Richard Tol. Worth remembering if you happen to run across a quote from the latter in relation to Stern or other climate-related issues.
But, enough of this. Sinclair on random sampling is much more interesting.
G'day JQ: What is also worth remembering is your slavish adoration of Nick Stern even when he claims (p.277) that marginal costs can go up while average costs stay the same. Richard Tol was right, neither Stern nor JQ is fit to teach economics. The rest of you possums could also learn something by perusing Michael Knox's piece for ABN Amro, "What if we took Stern seriously?" (at www.abnamromorgans.com.au).
Meantime JQ's own blog shows its own social democratic commitment to free speech by banning me and others from contributing while allowing the cowardly anonymous majorajam to offer, solely because the latter is an a...licker like most of the other denizens of that space.
Back to the Lancet data: The WHO uses World Bank data. The World Bank is saying that the population of Iraq in 2005 was 29 million. The World Bank estimated the crude mortality rate in Iraq in a 2002 report (the last they did this, apparently) at 7.8/1000/year. It also states that these are estimates based on a number of sources; none in Iraq appear to have been gathered from household surveys, but rather hospital reports etc.
For the sake of argument, however, let's grant that the mortality rate was closer to 7.0 than 5.5. The post-invasion mortality rate measured in the two Burnham et al surveys was 13.2, yielding an "excess" mortality rate of 6.2. At a population of 26 million---3 million LESS than WB stats---that would still be >570,000, a very large number. At the reported WB figure for crude mortality in 2002 of 7.8/1000, the household survey crude mortality rate of 13.2 yields a total of 468,000 dead as a consequence of the war.
It is difficult to avoid the conclusion, based on the stats the WHO and World Bank use, that the Lancet 2 figures---derived from a far more reliable method---are sound. Even if their pre-war mortality figures are low, the death toll from the war is shockingly high.
Refs: http://siteresources.worldbank.org/DATASTATISTICS/Resources/mna_wdi.pdf
http://www.emro.who.int/iraq/pdf/HealthSystemsProfile.pdf
Further to my post at #41, I have since had sight of Tol & Yohe 2007 forthcoming, (in World Economics), where they also comment on what they call "the non-Leibnizian calculus of the Stern Review". JQ - why not replace all current micro-economics textbooks with your own non-Leibnizian version?
John Tirman: The WHO lifetables that I cited (from World Health Survey 2004) were based, as Robert I believe pointed out, on cluster analysis and various other surveys in the 1990s. The World Bank is never a primary source, esepcially not on demographics, e.g. its population data for Papua New Guinea are based on a seriously flawed "census" of 2000, which failed to notice that it showed more people alive aged 20-29 and 35-39 than had been alive at the 1980 census, generally considered the soundest ever conducted; the result was an over-stated population and growth rate in 2000.
Back to The Lancet: normal academic standards require authors to check their sources and explain any discrepancies between theirs and others in the public domain, as with its "data" on crude mortality and total population. Also, in a study of Iraq's demographics one would expect to see data on the age structure of the population before the war. This is absent. The Lancet's claimed pre-war infant and child mortality is not believable for a country that had fought two major wars within 20 years and suffered from extremely stringent UN sanctions for 12 years. Its population figure equally implies a remarkably high growth rate. Halving the Lancet's average daily kill rate from 1,000 to 500 still implies that the anti-war media are asleep on the job - how many per day have been reported in May? That said the killing rate is too high, but is almost wholly due to sectarian strife, which may well produce a Lancet rate if the Coalition withdraw. No doubt Burnham & co would rub their hands with their usual ghoulish glee at being fully vindicated.
Figures derived from data collected in the 1990s are meaningless for Iraq's immediate pre-war mortality rate. The rate was coming down, as all sources show. Child and under-5 mortality is also not relevant to this, not only because the data are not recent, but because they represent a small fraction of the total population. The sanctions had their effect, but mostly in the 1990s. The population figures are linked for all to see in my previous post. Also demonstrated there: WHO figures were drawn from World Bank publications, and the WB acknowledges that they are not from anything remotely like a rigorous household survey. As for the Lancet authors, they did check for crude mortality discrepancies, and found none that were credible, and certainly none are pointed out in your posts.
And, as I conclusively demonstrated, even with the WB crude mortality rate for 2002, the war had taken nearly 500,000 lives in the first 40 months. Again, nothing in your argument counters that.
I doubt seriously that medical doctors dedicated to emergency public health services take ghoulish glee in any such killing. But your conjecture does reveal quite a bit about you.
# 40
John Q: I thought we had agreed to cease all hostilities? Professionally, I never support people. I prefer ideas. I did support Tim C against your biased editorial policy, but that was support AGAINST your totalitarianism, not support FOR Tim. I think that was very clear at the time, so I guess you just continue your habit of reinterpretation of facts to fit your preferred theory.
So Richard, speaking of ideas, do you agree with Tim C's assertion that Stern puts the cost of stablising CO2 at a one percentage point reduction in growth rates?
# 46:
No. Stern argues that emission reduction is cheap, in the order of a 1% reduction of income. In our new paper for World Economics (# 43), we argue that Stern's analysis of the costs of emission reduction shows a distinct negative bias. Emission reduction of the size as advocated by Stern would be much more expensive than he would like us to believe, and in fact also more expensive than his own model tells him.
That said, the Stern Review is so badly written and so full of basic mistakes and contradictions that I would not be surprised if at some page they say that economic growth would fall by 1%. In fact, the silly balanced growth equivalent would easily lead one down that path.
Silly me.
the second half of last sentence of the first para should read
"but in fact much less expensive that his own model tells him"
TL: debate moves on. What did I say at #34? To repeat, 1% of GDP now until 2100 reinvested at 5% pa produces by 2100 a capital sum (aka Future Fund) more than capable of offsetting Stern's 5% loss of GDP from CC by then. Do you like Stern & JQ believe in non-Leibniz calculus?
John Tirman: Les Roberts had a well known political agenda; his co-authors reveal by every turn of phrase their determination to enhance the death toll and their disappointment that they could not attribute all of it to the Americans. Although we can never know for sure, one suspects they also exaggerate death tolls in Congo and Sudan for dramatic effect, in both peasants are quite adept at melting into the bush/jungle when need arises, otherwise explain why their "governments" were able to rival Holocaust death rates without Hitler's superior technology. You keep citing the World Bank, which has no demographic credentials. Its population estimate for Iraq in 1999 is 22,797,000 (WDR 2000/01, p.316); how does that get to the Burnham figure of 27,139,584 in 2004? (Answer: 3.55% p.a., the fastest population growth rate in the world despite all those Lancet deaths in 2003/04). But the WB figure for 1999 is plausibly consistent with the WHO figure for 2002 (rate 2.44% p.a.).
Like Stern, Quiggin, and Lambert, it is time you separated political wish fulfilment from facts and the calculus.
John Tirman - you previously said "...in this random sample of 5000 26% of those polled have a family member murdered during the war, and another 12% saying they have a friend murdered. Zounds---that's about 10x the Lancet 2 numbers"
Ever heard of double counting? My cousin died in a riding accident 12 years ago in a community where she was well known as a farmer, qualified nurse, and equestrian. At least 12% of a random sample of that community of some 30,000 could have answered Yes to the question "do you have a friend who died in a riding accident?". Hey presto, over 3,000 of that community died in riding accidents in 1995.
Tim C says: "debate moves on". So rather than admit you were wrong, you try to change the subject.
Gosh, didn't see that one coming! As we all know, TC does not have a track record of stubburnly refusing to admit he's made a complete cock up, again!
Talking of which TC, have you worked out where all those displaced atmospheric gases are going yet?
I'm sorry to hear about your cousin, Tim, however, in the case of the Lancet study, in over 90% of the cases, a death certificate was produced.
TL: What error? JQ claimed that Alan Oxley (in The Australian 29th May)"does not know the difference between levels and rates of growth". Oxley had said: "The Australian Greens and the Australian Labor Party ... appear to support the assessment by Blair Government economist Nicholas Stern that prices have to be hiked sufficiently to reduce world growth by 1 per cent each year. A cut of 1 per cent is a lot. The world economy grows by about 6 per cent each year, rich economies between 2 per cent and 4 per cent". A reduction in the Australian economy's growth rate from 4% pa to 3% pa would mean by 2050 a reduction of 34% which is a lot in even in Deltoid speak. However Stern, as Michael Knox of ABN-Amro points out, gives a range of costs, from negative 4% to +15% of GDP. As I noted here, Stern's Summary of Conclusions states that "central estimates of the ANNUAL [my caps] costs of achieving stabilisation ...are around 1% of GDP if we start to take strong action now". However this is not in fact different from what Oxley stated. If Income is 100 in Year 1, and 104 in year 2, 4% of year 1 = 4, 3% of year 1 = 3, and 1% of yr 1 is 1, equal to the difference between 4% and 3%; likewise 4% of year 2 is 4.16,m 3% of year 2 is 3.12, a difference of 1.04, and 1% of year 2 is 1.04, amazingly enough. What this means is that if every year GDP growth would have been 4%, the increment in income is not 4%, because 1% is diverted to avoiding emissions; the difference in income is the same as if growth had been 3% not 4%. To spell it out yet again, by 2049 GDP growth under BAU at 4% from now would be 540, starting from 100 in 2006. However year on year, the increment in 2050 at 4% on BAU 2049 would be 21.6, and at 3% from BAU 2049, 16.2, for an absolute difference in increments of 5.4. One per cent of the GDP with BAU in 2049 is 5.4. A diversion of income of even only one per cent still reduces income by that amount and is equivalent to a reduction in growth rate by the same one per cent. This interpretation is consistent with that in the Allens Report for the Business Roundtable of the Australian Conservation Foundation. They considered, in sharp contrast with Stern, that emissions reduction to 60% of the 2000 level in Australia by 2050 would reduce the growth rate after 2013 only from 2.2% pa to 2.1% pa, but conceded that this still implied a reduction in GDP of 6% by 2050. Their spin on this was that it only represented a delay of 2.5 years on the level that would have been reached under BAU, i.e. in mid 2047. When the ALP and their trade union bosses get to hear of the 6%, what price nationwide strikes to secure compensatory wage increases? But the Allens cost estimate at 0.1% of GDP p.a. is way below ABN-Amro's Michael Knox's estimate of over 5%, which takes into account the high carbon intensity of Australia's economy. BTW, Oxley implied Stern was referring only to price increases, but in general his estimates included the costs of abatement measures as such, and these have an opportunity cost which he disregarded (like Allens Consulting). My calculations here showed that investing 1% pa of world GDP at 5% pa compounded would generate a future fund capable by 2100 of earning a many times larger addition to GDP than the 5% cost of GDP under BAU climate change by then. But the crux of the matter is Stern's sleight of hand whereby he arbitrarily sets a growth rate of GDP under BAU to 2100 of 2.5%, takes 1% of that, and hey presto, growth to 2100 of 2.49% yields that as a difference. But in every year the difference between say 3% growth in GDP on the previous year and 4% on that year is equal to 1% of GDP in the following year. Stern has been at the least disingenuous, or just possibly deliberately misleading? Just to spell it out again: if GDP in 2006 in 100, and grows at 4%pa, by 2049 it has reached 540. One per cent of that is 5.4. Growth at 4% to 2050 takes it to 561.65, an increment of 21.65; growth at 3% takes it to 556.2, an increment of 16.2. The difference between the increments is 5.4. Thus a 1% cost of GDP for emissions reduction in 2049 equates to a difference in growth increments of the same amount in 2050. This is consistent with a difference in growth rates of 1%, eg between 4% and 3%, rather than the misleading 0.01 (2.5%-2.49%) claimed by Stern.
It seems fair to conclude Quiggin's claim that Alan Oxley "does not know the difference between levels and rates of growth" is now accepted here as false. But Oxley did not go far enough in his statement that Stern's reduction in GDP growth of 1% p.a. from emissions reduyction costs is actually "a lot". Stern had defended his view that 1% is not much with this: "...one can think of the price level being 1% higher through time, with the same GDP level(sic) and growth rate. The same level of real output is reached around 4 months later than would be the case in the absence of mitigation costs" (p.278) In fact if we set the price index at 100 for 2006, and raise it by 1% pa as Stern states, then by 2100 the index will be 254. Using the standard method of deflating nominal GDP and applying this deflator to the BAU GDP in 2100 (at Stern's 2.5% pa) which would be US$356,543 trillion (from US$35,000 trillion in 2006), real GDP in 2100 would be cUS$140,000 trillion, a shortfall that could not by any means be made up in just 4 months (see Greg Mankiw's Macroeconomics, 1997, p.26).
"Stern has been at the least disingenuous, or just possibly deliberately misleading?"
Tim C, I agree that someone is being disingenuous, or just possibly deliberately misleading, but it isn't Nick Stern.
Instead of admitting that you'd misinterpreted the 1% figure, you find it easier to believe that Stern - former Chief Economist at the World Bank - has fundamentally misunderstood or misrepresented one of the key figures in his own report.
I've given up trying to convince you that you're wrong. Instead, I encourage you to publish your sensational findings immediately.
You know tim C. I'm sure you believe you are making a very lucid and compelling point here.
I doubt others would agree,
You doubtless would attribute that disagreement to your intellectual superiority.
Other less charitable possibilities suggest themselves.
TC,
Your maths is getting seriously messed up. It's seems to be, because you to keep looking at what happens between single years rather than several (plus mixing it up with a lot of other material).
TC,
Hopefully this helps:
Lets say the base line is 4% for 43 years (2050) where GDP in 2006 (year 0) is 100. Then GDP will be 540.0496. If emissions reduction means that GDP in 2050 is 1% lower, then GDP will be 535.6490. This can be seen two ways.
Either every year GDP is 1% lower than it would be, e.g. year 0 is 99, year 1 is 102.96, year 2 is 107.0784, etc, up to year 43 where GDP is 535.6490.
Or, year 0 is 100 and grows at 3.9756951% (approx), so that year 1 is 103.97, year 2 is 108.1095, etc, up to year 43 where GDP is again, 535.6490.
In otherwords, for GDP to be 1% lower 43 years later, there needs to be a small drop in growth of 0.024304949% (approx).
Yes, one wonders why Tim C isn't spending his time explaining his Galileo-like discovery with other intellectual giants instead of making prolix comments on blogs.
Unless, of course, the comments will be lifted directly into his peer-reviewed article. In which case, everyone prepare your little speeches for when the reporters call you asking about to contribute to their you-knew-who-when story.
Best,
D
Meyrick: Fancy that, you are too kind. But none of what you say is what Stern said. Moreover you are as wrong as Stern was artful when you say "In other words, for GDP to be 1% lower 43 years later, there needs to be a small drop in growth of 0.024304949% (approx)" Stern stated quite clearly that the loss of GDP from averting emissions would be 1% "ANNUALLY" and therefore ab initio. His series for GDP growing from now at 2.5% pa or at 2.49% produces a difference in income in 2007, year 1, which is less than 1%. Even by 2100 his two income series have not developed a 1% difference, and the difference between his two series and 1% of GDP (@2.5% pa from now) in 2100 is no less than US$300 trillion, no doubt small change to one so clever and therefore as rich as you, but worth a bit to lots of peasants in India and China.. Stern is all spin to the point where he has no idea what he means half the time (including his frequent rewriting of the calculus). My quote from him stating that the 1% cost of emission mitigation is like a 1% annual increase in the GDP deflator (or CPI) does indeed mean that REAL world GDP would be down by US$217,000 trillion by 2100. If you cannot grasp that, you should be in charge of the World Bank!
_Stern is all spin to the point where he has no idea what he means half the time_
If you keep digging, you might eventually pop up in London where you can berate Nick Stern in person.
TC,
My workings (logic) are based on the quote in comment 17, although I've used your figures rather than Sterns. However, using Sterns figures does indeed produce results similar to his.
P.S. I'm surprised you didn't notice my mistake above. It should be 44 years, not 43. However, the results don't change much and the logic remains the same.
Meyrick et al: until you address my comment at #55 we will not progress. There I said that using normal and very simple arithmetic, if your nominal income goes up by say 5%, but prices go up by 3%, your real income has only gone up by 2%. When Stern says that BAU income goes up by 2.5% pa but, in his words, the costs of emission mitigation are as if prices have gone up by 1% p.a., then your income has only gone up by 1.5%, not his 2.49%.
I doubt you are up to this, but take his world GDP at US$35,000 trillion in 2005, grow it by 2.5% in 2006, then take off 1%, then grow that by 2.5% in 2007, but next year take off 1%, and so on, and by 2100 you will have REAL GDP or income of cUS$142 trillion, as I got using Greg Mankiw's formula, rather than Stern's bogus US$362 trillion.
The problem is that all you dear cretins like JQ, TL, Kirby, especially Dano, and above all the ineffable Stern and his Team, is that you are prisoners of straightline manipulation of spreadsheets and innocent, as I have pointed out here before, and Richard Tol (with Yohe 2007 forthcoming likewise) of the calculus. Any half competent accountant would spot Stern's frauds - but none of you could (any more than the third year math students at the University of Western Australia who cannot even be relied on to get 24 when multiplying 3 by 8, see Alder, Quadrant, June 2007).
Err, Tim C: even Richard Tol said you were wrong.
Ooooh. Especially Dano. Interesting rhetoric, sure to be included in what must be the final paras of the discussion section of your groundbreaking new paper.
You should check over at CA and see if they have their journal going yet, TimC. I named it for them: Galileo: The CA Journal of NewScience. Tagline: Empiricism is for wimps without certitude.
Best,
D
Dear Tim C,
_take world GDP at US$35,000 trillion in 2005, grow it by 2.5% in 2006, then take off 1%, then grow that by 2.5% in 2007, but **next year take off 1%, and so on**_
Stern is talking about prices going up by 1% over the course of one or more years, not in every year. Following this increase prices stay high, but don't continue to grow, so a 1% gap between mitigated and BAU GDP persists. Plug that into a spreadsheet to see how Stern arrives at his figures.
As I've said before, you've misinterpreted the 1% figure. It is the 1% gap between mitigated and BAU GDP that Stern refers to when he talks about the cost of mitigation, not a year-on-year 1% increase in prices (or equivalently, an ongoing 1% reduction in annual GDP growth). Re-read [section 10.4](http://www.hm-treasury.gov.uk/media/8A7/95/Chapter_10_Macroeconomic_mod…) of the Stern report and perhaps all will become clear.
By the way, whilst others may be less generous (and I don't get the final say in these matters), in my opinion your heroic refusal to recognise your error should earn you a place at Odin's table in Valhalla.
Tim L; "Err, Tim C: even Richard Tol said you were wrong". When where? Not here - in fact he sent me his paper noting Stern's non-Newtonian (or Leibnizian) calculus AFTER I had pointed out on this very thread Stern's claim that average cost of mitigation could stay flat even if marginal cost rose (a plain impossibility to N and L and everybody else in the world except to you and your egregious mates).
But then you are as ever incapable of addressing the substance. What is in fact (or math) wrong with my previous post? Surely you can rise above Dano's bluster and show where I was wrong. But since you have yet to admit that a 1% reduction in GDP growth from say 4% implies 3% growth, I know you cannot.
TC,
Your quote in comment 55 is making the same mistake as before, only it's the other way round given we are talking about prices rather than GDP. You confuse prices being 1% higher pa but where price index growth is the same, with a 1% increase in the growth of the price index.
Plus, I notice you've now descended to the point of name calling: "dear cretins".
Dear TimC,
In comment 46 I asked Richard Tol:
>So Richard, speaking of ideas, do you agree with Tim C's assertion that Stern puts the cost of stablising CO2 at a one percentage point reduction in growth rates?
He replied:
>No. Stern argues that emission reduction is cheap, in the order of a 1% reduction of income.
Hope that clears things up for you.
Munnin: thanks, but do read Stern #10.4 p.278 again. "...the numbers involved are potentially large in absolute terms - maybe hundreds of billions of dollars annually (1% of current world GDP equates to c. $350-400 billion)". What does "annually" mean? True, Stern's next sentence implies "annually" means costs incurred once only in the single year 2100, as he states that "if mitigation will cost only 1% of GDP by 2100, this is equivalent to the average growth rate of annual GDP dropping from 2.5% to 2.49%". If mitigation will cost us nothing before 2100, we clearly do not need to raise prices through emission trading now. But then that para. ends with this: "alternatively one can think of the price level being 1% higher through time, with the same GDP level and growth. Most would think that is 1% p.a. especially as Stern himself in his Summary of Conclusions (p.xvi) states that "central estimates of the ANNUAL costs of achieving stabilisation ...are around 1% of global GDP".
Then in the last pages of Stern's Chapter 9 we get a different take. Apparently an additional investment of $7.9 trillion ($176 billion a year) would be needed by 2050 to reduce power generation emissions to the 2005 level, and Stern then manages to reduce that to a mere $100 billion over 45 years by two more assumptions, first that $4.5 trillion would not be needed for new fossil fuel plants (yet that cost is included in his BAU) and second that there would significant savings in transmission and distribution and fuel costs (p.264). So the "total net cost" of meeting all new power generation demand will be only $100 billion, or just over $2 billion a year to 2050. If that is not pie in the sky, what would be, other than Enron-style creative accounting (such as counting recurrent costs savings as if they were capital)?
Stern's cited figures ignore the impact on prices as energy costs are forced up progressively across the board over many years to secure adoption of alternative fuels. Oil and coal prices have more than doubled over the last 6 years and there has as yet been no significant net switch to those alternative fuels, given the evident still increasing level of total global emissions. Evidently we need another doubling - and would that be enough to drive either lower consumpttion or development of alternative technology?
Finally, yet again, what error are your referring to? Stern's GDP of $35,000 billion in 2005 growing at 2.5% produces $35,875 bn. in 2006, and only $3,872 bn at 2.49%, a difference of $3.5 bn, which I suggest is 0.01% of GDP in 2005, rather less than Stern's $350 billion which he stated to be 1% of GDP. Munnin, maybe you misplaced a decimal? Stern was wrong to claim that 1% of GDP in 2006 is equal to the difference between growth of 2.5% in that year and at 2.49%.
Tim Lambert:: Tol's comment is ambiguous and does not match either his own analysis of Stern or mine above, where for Stern 1% of GDP is the same as 0.01%.
Tim C writes:
>Tol's comment is ambiguous
No it isn't. Your refusal to admit to your error is pathetic.
TimC, I think this quote from Section 10.4 is key to understanding Stern's meaning:
_one can think of annual GDP being 1% lower through time, with the same growth rate, after an initial adjustment_
In this analogy, mitigation incurs early costs (e.g. before 2020) that reduce global GDP for the rest of the century to 1% below the BAU case. Following this "initial adjustment", GDP in the mitigation scenario remains 1% below BAU GDP to 2100 - i.e. it grows "with the same growth rate", so the level of GDP always lags 1% behind.
If we assume steady BAU GDP growth of 2.5%, this means GDP in the mitigation scenario (post adjustment) lags approximately 1%/2.5% * 12 months = 4.8 months behind BAU GDP. Stern's vague about the "initial adjustment" required for mitigation, but GDP growth of 2.4% (0.1% below BAU) for 10 years would do the trick.
_"...the numbers involved are potentially large in absolute terms - maybe hundreds of billions of dollars annually (1% of current world GDP equates to c. $350-400 billion)". What does "annually" mean?_
Annually means that, following the initial adjustment, GDP in a given year will be hundreds of billions of dollars lower than it would otherwise have been. Stern uses current world GDP to illustrate the scale of the figures.
_"if mitigation will cost only 1% of GDP by 2100, this is equivalent to the average growth rate of annual GDP dropping from 2.5% to 2.49%". If mitigation will cost us nothing before 2100 ..._
I think Stern's use of the term "cost" is causing confusion here - "impact" would have been better. By "cost" he means that, as a result of early mitigation measures, global GDP will be ~1% lower in 2100 than it would otherwise have been (as it will in all years following the "initial adjustment").
_Most would think that is 1% p.a. especially as Stern himself in his Summary of Conclusions (p.xvi) states that "central estimates of the ANNUAL costs of achieving stabilisation ...are around 1% of global GDP"._
I agree that the wording regarding the cost of mitigation in the Summary of Conclusions (and elsewhere in the document) is confusing. I originally made the same mistake as you in interpreting Stern's figures - only after carefully reading Chapter 10.4 did the meaning become clear.
_Stern was wrong to claim that 1% of GDP in 2006 is equal to the difference between growth of 2.5% in that year and at 2.49%._
As I hope I've made clear above, I don't think this was what Stern was claiming. To see where Stern gets his figures, first take 2006 GDP to be 100 and steady BAU GDP growth of 2.5% to 2100. Then GDP in 2100 will be 100*(1.025)^94 = 1018.7.
Now assume GDP after mitigation will be 1% lower in 2100, i.e. 1008.5. Average GDP growth in the mitigation scenario is then found by solving the following equation for x:
100*(1+x)^94 = 1008.7
x = exp[ln(1008.5/100)/94] - 1 = 2.49%
As for your comments about chapter 9, I'd rather stick to chapter 10 at the moment, to make sure we don't muddy the waters, but I'll happily return to those later.
ps Posted under a slightly different name, in a (no doubt) vain attempt to avoid a long wait in the moderation queue.
Dear Tim Lambert: I apologise for the length of this offering, but you have accused me, repeatedly, of error. I would be greatly obliged if you would itemise the errors in the following complete listing of my offerings to this thread (excluding the Iraq-Lancet series, from which I draw comfort that no substantive rebuttal has emerged, even Thirman has been silent for days now).
#9. Here's an example from Quiggin's Blog today, claiming that Alan Oxley's piece in today's Australian shows he does not know the difference between "levels and growth rates" when stating that Stern's costs estimate of avoiding emissions is 1% of GDP, which Oxley rightly said "is a lot" when developed countries rarely achieve even 4% growth p.a. Quiggin has consistently claimed that Stern's 1% is a once and for all one-off cost, when in fact Stern's Review (p.xvi) explicitly states it is 1% of GDP ANNUALLY, i.e. now and forever.
Posted by: Tim Curtin | May 28, 2007 10:30 PM
#10Quiggin is right and you are wrong, Tim C. Stern gives the cost as 1% of GDP, not as a 1 percentage point reduction in growth rates as Oxley asserts. Please stay away from arguments about economics in future.
Posted by: Tim Lambert | May 28, 2007 11:01 PM
#11TL: You are the one who needs to stay away from economics, in which you unlike me (M.Sc Econ.)have no qualifications, and even less in maths: a cost of 1% of GDP (say $1 on $100) is the same as the difference between a 3% growth and a 4% growth ie. $4-$3 = $1 everywhere except UQ and UNSW. Stern said the cost is 1% of GDP p.a.; that is a rate, not a level except in JQ's classes
Posted by: Tim Curtin | May 28, 2007 11:31 PM
[both Stern & JQ cannot work out percentages, see below, TC 6 June 2007]
#27 Ian and dsquared: Stern's cost estimate is 1% of GDP in every year; that means that in year 2 the base is 99 for growth at 3%; in year 2 costs at 1% again reduce the principal at end year 2 for growth in year 3, to $100.95. Growth at 3% pa with BAU to 2050 brings GDP to $356 (from $100 in 2007). Growth at 3% with each year's GDP reduced by emission reduction costs of 1% of GDP brings GDP by 2050 to $229, 64% of the BAU level. Of course for great economists like JQ and TL that is trivial, but I don't find it so. Alan Oxley got it right.
Posted by: Tim Curtin | May 29, 2007 04:37 AM
#30 re Ian Gould re Stern:
Here's Alan Oxley: "...assessment by Blair Government economist Nicholas Stern that prices have to be hiked sufficiently to reduce world growth by 1 per cent each year". Stern actually said 1% of income p.a. most of the time in his Review. I know that the 270 Australian economists (notable absentees were McKibbin and Garnaut, notable inclusion was Stephen Keen who cannot by any stretch of the imagination be considered an economist) who signed up to the Quiggin nonsense often think of costs as benefits, but whether we use 33% of income growth or 1% of income on non-productive investments, we will certainly be impoverished....
Posted by: Tim Curtin | May 29, 2007 09:48 PM
#34 Not for the first time Lambert has shown here (at #17) that he too is capable of selective quotation: the sentence before the section he quoted is "The numbers involved in stabilising emissions are potentially large in absolute terms - maybe hundreds of billions of dollars annually (1% of current world GDP equates to approximately US$350-400 billion) - but are small (!) in relation to the level (sic) and growth of output". Stern's error here is once again ignoring opportunity costs. Annual investment of 1% of each year's GDP in a "Future Fund" earning just 5% (less than today's bond rate here) accumulates to US$1,455,475 BILLION by 2100, ignoring any capital gains. The income from the FF in 2100 if drawn then would be US$73,777 billion, which is substantially more than Stern's cost (arising from slower growth @2.49% instead of 2.5%) of just US$3,591 billion in 2100. The income on the FF would be quite enough to pay either for any adaptation to proven climate change damage by then or to compensate those who could show they were suffering from such damage.
Posted by: Tim Curtin | May 30, 2007 04:09 AM
#41 G'day JQ: What is also worth remembering is your slavish adoration of Nick Stern even when he claims (p.277) that marginal costs can go up while average costs stay the same. Richard Tol was right, neither Stern nor JQ is fit to teach economics. The rest of you possums could also learn something by perusing Michael Knox's piece for ABN Amro, "What if we took Stern seriously?" (at www.abnamromorgans.com.au).
Meantime JQ's own blog shows its own social democratic commitment to free speech by banning me and others from contributing while allowing the cowardly anonymous majorajam to offer, solely because the latter is an a...licker like most of the other denizens of that space.
Posted by: Tim Curtin | May 31, 2007 08:15 AM
#46:
No. Stern argues that emission reduction is cheap, in the order of a 1% reduction of income. In our new paper for World Economics (# 43), we argue that Stern's analysis of the costs of emission reduction shows a distinct negative bias. Emission reduction of the size as advocated by Stern would be much more expensive than he would like us to believe, and in fact also more expensive than his own model tells him.
That said, the Stern Review is so badly written and so full of basic mistakes and contradictions that I would not be surprised if at some page they say that economic growth would fall by 1%. In fact, the silly balanced growth equivalent would easily lead one down that path.
Posted by: Richard Tol | June 1, 2007 06:06 AM
#49 TL: debate moves on. What did I say at #34? To repeat, 1% of GDP now until 2100 reinvested at 5% pa produces by 2100 a capital sum (aka Future Fund) more than capable of offsetting Stern's 5% loss of GDP from CC by then. Do you like Stern & JQ believe in non-Leibniz calculus?...
Like Stern, Quiggin, and Lambert, it is time you separated political wish fulfilment from facts and the calculus.
Posted by: Tim Curtin | June 1, 2007 06:38 AM
#54TL: What error? JQ claimed that Alan Oxley (in The Australian 29th May)"does not know the difference between levels and rates of growth". Oxley had said: "The Australian Greens and the Australian Labor Party ... appear to support the assessment by Blair Government economist Nicholas Stern that prices have to be hiked sufficiently to reduce world growth by 1 per cent each year. A cut of 1 per cent is a lot. The world economy grows by about 6 per cent each year, rich economies between 2 per cent and 4 per cent". A reduction in the Australian economy's growth rate from 4% pa to 3% pa would mean by 2050 a reduction of 34% which is a lot in even in Deltoid speak. [I have truncated this post, it was both too long and repetitive, though as a former teacher and lecturer I know that endless repetition is needed when dealing with dunces].
#55 It seems fair to conclude Quiggin's claim that Alan Oxley "does not know the difference between levels and rates of growth" is now accepted here as false. But Oxley did not go far enough in his statement that Stern's reduction in GDP growth of 1% p.a. from emissions reduyction costs is actually "a lot". Stern had defended his view that 1% is not much with this: "...one can think of the price level being 1% higher through time, with the same GDP level(sic) and growth rate. The same level of real output is reached around 4 months later than would be the case in the absence of mitigation costs" (p.278) In fact if we set the price index at 100 for 2006, and raise it by 1% pa as Stern states, then by 2100 the index will be 254. Using the standard method of deflating nominal GDP and applying this deflator to the BAU GDP in 2100 (at Stern's 2.5% pa) which would be US$356,543 trillion (from US$35,000 trillion in 2006), real GDP in 2100 would be cUS$140,000 trillion, a shortfall that could not by any means be made up in just 4 months (see Greg Mankiw's Macroeconomics, 1997, p.26).
Posted by: Tim Curtin | June 4, 2007 03:54 AM
#61Meyrick: Fancy that, you are too kind. But none of what you say is what Stern said. Moreover you are as wrong as Stern was artful when you say "In other words, for GDP to be 1% lower 43 years later, there needs to be a small drop in growth of 0.024304949% (approx)" Stern stated quite clearly that the loss of GDP from averting emissions would be 1% "ANNUALLY" and therefore ab initio. His series for GDP growing from now at 2.5% pa or at 2.49% produces a difference in income in 2007, year 1, which is [much]less than 1%. Even by 2100 his two income series have not developed a 1% difference, and the difference between his two series and 1% of GDP (@2.5% pa from now) in 2100 is no less than US$300 trillion, no doubt small change to one so clever and therefore as rich as you, but worth a bit to lots of peasants in India and China.. Stern is all spin to the point where he has no idea what he means half the time (including his frequent rewriting of the calculus). My quote from him stating that the 1% cost of emission mitigation is like a 1% annual increase in the GDP deflator (or CPI) does indeed mean that REAL world GDP would be down by US$217,000 trillion by 2100. If you cannot grasp that, you should be in charge of the World Bank!
Posted by: Tim Curtin | June 5, 2007 01:06 AM
#64Meyrick et al: until you address my comment at #55 we will not progress. There I said that using normal and very simple arithmetic, if your nominal income goes up by say 5%, but prices go up by 3%, your real income has only gone up by 2%. When Stern says that BAU income goes up by 2.5% pa but, in his words, the costs of emission mitigation are as if prices have gone up by 1% p.a., then your income has only gone up by 1.5%, not his 2.49%.
I doubt you are up to this, but take his world GDP at US$35,000 trillion in 2005, grow it by 2.5% in 2006, then take off 1%, then grow that by 2.5% in 2007, but next year take off 1%, and so on, and by 2100 you will have REAL GDP or income of cUS$142 trillion, as I got using Greg Mankiw's formula, rather than Stern's bogus US$362 trillion.
The problem is that all you dear cretins like JQ, TL, Kirby, especially Dano, and above all the ineffable Stern and his Team, is that you are prisoners of straightline manipulation of spreadsheets and innocent, as I have pointed out here before, and Richard Tol (with Yohe 2007 forthcoming likewise) of the calculus. Any half competent accountant would spot Stern's frauds - but none of you could (any more than the third year math students at the University of Western Australia who cannot even be relied on to get 24 when multiplying 3 by 8, see Alder, Quadrant, June 2007).
Posted by: Tim Curtin | June 5, 2007 08:18 AM
#68Tim L; "Err, Tim C: even Richard Tol said you were wrong". When where? Not here - in fact he sent me his paper noting Stern's non-Newtonian (or Leibnizian) calculus AFTER I had pointed out on this very thread Stern's claim that average cost of mitigation could stay flat even if marginal cost rose (a plain impossibility to N and L and everybody else in the world except to you and your egregious mates).
But then you are as ever incapable of addressing the substance. What is in fact (or math) wrong with my previous post? Surely you can rise above Dano's bluster and show where I was wrong. But since you have yet to admit that a 1% reduction in GDP growth from say 4% implies 3% growth, I know you cannot.
Posted by: Tim Curtin | June 5, 2007 09:21 AM
#71Munin: thanks, but do read Stern #10.4 p.278 again. "...the numbers involved are potentially large in absolute terms - maybe hundreds of billions of dollars annually (1% of current world GDP equates to c. $350-400 billion)". What does "annually" mean? True, Stern's next sentence implies "annually" means costs incurred once only in the single year 2100, as he states that "if mitigation will cost only 1% of GDP by 2100, this is equivalent to the average growth rate of annual GDP dropping from 2.5% to 2.49%". If mitigation will cost us nothing before 2100, we clearly do not need to raise prices through emission trading now. But then that para. ends with this: "alternatively one can think of the price level being 1% higher through time, with the same GDP level and growth". Most would think that is 1% p.a. especially as Stern himself in his Summary of Conclusions (p.xvi) states that "central estimates of the ANNUAL costs of achieving stabilisation ...are around 1% of global GDP".
Then in the last pages of Stern's Chapter 9 we get a different take. Apparently an additional investment of $7.9 trillion ($176 billion a year) would be needed by 2050 to reduce power generation emissions to the 2005 level, and Stern then manages to reduce that to a mere $100 billion over 45 years by two more assumptions, first that $4.5 trillion would not be needed for new fossil fuel plants (yet that cost is included in his BAU) and second that there would significant savings in transmission and distribution and fuel costs (p.264). So the "total net cost" of meeting all new power generation demand will be only $100 billion, or just over $2 billion a year to 2050. If that is not pie in the sky, what would be, other than Enron-style creative accounting (such as counting recurrent costs savings as if they were capital)?
Stern's cited figures ignore the impact on prices as energy costs are forced up progressively across the board over many years to secure adoption of alternative fuels. Oil and coal prices have more than doubled over the last 6 years and there has as yet been no significant net switch to those alternative fuels, given the evident still increasing level of total global emissions. Evidently we need another doubling - and would that be enough to drive either lower consumpttion or development of alternative technology? Finally, yet again, what error are your referring to? Stern's GDP of $35,000 billion in 2005 growing at 2.5% produces $35,875 bn. in 2006, and only $3,872 bn at 2.49%, a difference of $3.5 bn, which I suggest is 0.01% of GDP in 2005, rather less than Stern's $350 billion which he stated to be 1% of GDP. Munnin, maybe you misplaced a decimal? Stern was wrong to claim that 1% of GDP in 2006 is equal to the difference between growth of 2.5% in that year and at 2.49%. Tim Lambert: Tol's comment is ambiguous and does not match either his own analysis of Stern or mine above, where for Stern 1% of GDP is the same as 0.01%.
Posted by: Tim Curtin | June 6, 2007 01:55 AM
Dear Tim Lambert, again apologies for recycling, but you have made a serious allegation, and I would welcome your itemised refutations of EACH of the above postings on your esteemed blog. Failing that, please let me have details of your server, I haf frends in Bwejing! (joke!, not something your biggest fans are very good at).
Tim C writes
There are plenty of refutations above. That you choose to ignore them (or in this case simply edit them out) is your problem, and nobody elses. We might take you seriously if you put your points in a clearly laid out and concise manner (using paragraphs would be nice too), as opposed to your hack cut-n-paste job.
Hi Meyrick:
I blame the dismal lay out of all blogs, why can they not use MS Word etc?
But you are the slothful t**t, there are enough reference points, I await your itemised refutations, and promise to cite them in my forthcomimg paper.
Best
Tim
_I blame the dismal lay out of all blogs_
Quelle surprise. Try putting two newlines between paragraphs to improve the formatting. The Preview button is also helpful.
_you are the slothful t**t_
I assume you mean twit (noun), which is rather unkind. Personally, I favour the verb.
By the way TimC, for some reason my comments are held for moderation, which means they often appear late and out of order (this also messes up the comment numbering).
In case you missed it, I've responded to some of your questions [above](http://scienceblogs.com/deltoid/2007/05/sinclair_davidson_lancet_denia…) (was comment #73 at time of writing).
But then if you didn't spot that comment, I doubt you'll spot this one either. Sometimes I wonder why I bother.
Dear Munin or Munnin, first, apologies for my rudeness; a pity your #73 was delayed in appearance, and you certainly make the best effort yet at sorting out the contradictions in the Stern Review. The contradictions remain, who are you to decide which of Stern's varying claims is the right one? Your sympathetic account does not mitigate Stern's minimising the costs of what is a major challenge - his claim in chap.9 that it will only cost $100 billion net to stabilise power sector emissions at today's level is breathtaking. Australia could save the whole planet from its own budget in a year or two!
TimC, TimC, TimC. Timtimtim. Tim.
Your Editor here.
Pal, your blockbuster, Galileo-like trouncing -- pugilist-like -- of badStern is due in two weeks. TWO. Twotwotwo. We're gonna proooove that global warming is a farce, you and me pal. Together. You're gonna be a starrrr. Trouncing. Documentary. I got your paper lined up with Sonia. Big. Bigbigbig. Filmmakers are callin' too.
But Tim. Timtimtim. Ya gotta stop wasting time on these cretins, Tim. Publish your paper. No more comments. Knock the entire edifice of environmentalism down, Tim. Back to it. Edifice crumbles, Tim. Write, Tim. Write. Economics, Tim.
Best,
Your Editor
And of course, your faith-based claim that NOT doing so will cost less is based on ...
an absolute disregard for science.
And an absolutely reprehensible willingness to push the cost of not doing anything onto the next two or more generations.
TimC, in terms of the meaning of the widely quoted "1% cost" figure, I wouldn't say that Stern has been inconsistent (from the evidence that I've seen), though I agree that he could have made his meaning clearer.
I'm not qualified to comment on the magnitude of the cost or damage estimates, though I note the concerns of Oxford economist [Dieter Helm](http://www.publications.parliament.uk/pa/jt200607/jtselect/jtclimate/me…) (see point 2), who says the Stern report:
> states the costs and damage in relation to GDP. GDP takes little account of asset valuations (including the environment and the climate), and includes almost no pollution costs. It is, in effect, a cash number, and is peculiarly unsuitable for considering environmental issues.
> takes a very optimistic view (as does the IPCC) of the costs of mitigation-perhaps 1% GDP. These calculations are uncertain-since we do not know the technologies-and crucially these estimates do not take proper account of the policy costs of delivering them.
In other words, he reckons the Stern report underestimates the true costs of both damage and mitigation. His concerns look reasonable to me.
Munin: No doubt you have seen the G8 Summit Declaration
of 7 June 2007 headed "CLIMATE CHANGE, ENERGY EFFICIENCY AND ENERGY SECURITY - CHALLENGE AND OPPORTUNITY FOR WORLD ECONOMIC GROWTH".
Ian Castle has spotted that the text provides an interesting comparison with the Declaration of the
Venice Summit of the G7 on 23 June 1980, which is available at
http://www.ioc.u-tokyo.ac.jp/~worldjpn/documents/texts/summit/19800623…
tml
The extracts from paras. 10-13 (pasted below) are of special interest.
"[10] [W]e will seek a large increase in the use of coal and enhanced use of nuclear power in the medium term and a substantial increase in production of synthetic fuels, in solar energy and other sources of renewable energy over
the longer term...
"[11] We shall encourage the exploration and development of our indigenous hydrocarbon resources in order to secure maximum production on a long-term basis.
"[12] Together we intend to double coal production and use by early 1990. We will encourage long-term commitments by coal producers and consumers..."
I suspect that this week's statement will look just as funny, along with Stern's Review, in 2034.
You just won't admit you fucked up, will you Tim C.
Tim Lambert and Meyrick Kirby
You keep saying I made some grotesque error, eg "Stern gives the cost as 1% of GDP, not as a 1 percentage point reduction in growth rates as Oxley asserts. Please stay away from arguments about economics in future." Tim Lambert | May 28, 2007 11:01 PM
Ever hopeful let my try again. Stern himself says in his Summary of Conclusions that "central estimates of the ANNUAL COSTS of achieving stabilisation between 500 and 550 ppm CO2e are around 1% of GDP" (p.xvi, my caps). If I am in error so is Stern, but I am entitled to base myself on his Conclusions. It is true that elsewhere Stern implies that the total cost of stabilisation to 2100 is just 1% of global GDP in 2006, or US$350 billion. That absurd claim is what triviliases his cost benefit analysis. Increases of 100% in the wholesale price of electricity in much of Australia over the last year because of the drought are comparable to a carbon price of A$40 per tonne, and are said (in today's Australian, report by Mike Steketee) to be likely to lead to increases in the CPI of up to 1.5%, already above Stern's ceiling. Stern's own shadow price of carbon is US$314 per tonne, which suggests an impact on the CPI of as much as 10%, not Stern's 1% once and for all. BTW, Stern employs various strategems to achieve his low cost estimates, including the assumption that "private households with employed persons" use no energy at all (p.297).
As explained numerous times, by numerous different people, you have misinterpreted Stern's words. I would try to explain your misinterpretation to you, again, but really, what is the point? You really are beyond being a troll, more of a super-troll, or uber-troll. Amusing in a way, but franky everyone else has moved on.
Tim Lambert (or your sock puppet Meyrick as (1) it is evident from Google that he has no independent existence outside Deltoid, and (2) like you has limited skills in numeracy and literacy).
1. That Stern really did mean to say that stabilising emissions would cost at least 1% of GDP PER ANNUM (as he did at p.xvi) is also evident from his Review's detailed costing of CO2 emission reduction, see his Fig.9.5, p.260. This figure shows the average cost of reducing fossil fuel emissions to 18 GtCO2 in 2050, starting at US$100 in 2005. The IEA shows that the CO2 intensity per $1000 of the USA's GDP at 0.56 tonnes in 2003, or 5.8 billion metric tonnes of CO2. At USA$100 per tonne, the cost of reduction is $580 billion or 5.6% of USA GDP in 2003. The same calculation for Australia produces an initial cost of 9.08% of GDP, not surprising given its much higher intensity of CO2 per $1,000 of GDP, at .91 The average cost gradually falls to $25 per t CO2 by 2050, according to Stern, but Fig. 9.5 makes it clear that Stern envisages annually recurring albeit declining marginal cost, but is not a single year cost as claimed by TL, MK, and JQ. Stern does say (p.260)that by 2050 the cost of sstabilisation will have fallen to 1% ($1 trillion) of world GDP then, which means that it could not have been a mere 1% in 2006 when the unit cost was double his projection for 2050 and when he said 1% of 2005 GDP was $350 billion. Apologies all round?
I see my name is being invoked.
I guess part of the problem is that Stern's phrasing is very unfortunate. Stern is stuck in the 1970s and thinks in terms of balanced / steady state growth paths. What he means to argue is that the costs of stabilising at 550 ppm CO2eq is EQUIVALENT to lowering GDP TODAY by 1%, while keeping the same growth rate, so that GDP in all future years is also lower by 1%.
This is a very confusing way of thinking about costs.
The number of 1% is also very wrong. Emission reduction is much more expensive that Stern would like us to believe.
You may be tempted to think that if you take Stern's 1% of income today, and invest it at a reasonable return, you'd get a much bigger sum than the 5% of income that Stern claims the impacts of climate change will cost. That reasoning would be wrong. The 5% cost of climate change is also along a steady state growth path -- it is 5% now and forever.
Unfortunately, the 5% number is also severely biased. Climate change is much less dramatic than Stern would like us to believe.
So Richard would you agree that Tim Curtin's interpretation of Stern is also "very wrong"?
I fully agree with Tim C that the Stern Review is a deeply flawed piece of work, but I do not share Tim's interpretation of Stern's cost estimates.
Tim C: "At USA$100 per tonne, the cost of reduction is $580 billion or 5.6% of USA GDP in 2003."
So basically Tim you're treating the entire cost of greenhouse gas reduction projects as a deadweight loss to the economy.
Dear Ian Gould:
First while Richard T says he does not share my interpretation of Stern's estimates of the costs of mitigation, I certainly share every word of his, as I believe it substantiates the thrust of - if not all the detail - the positions I have taken here.
Second, while I also agree with Richard that the costs of "global warming" are "much less dramatic" than Stern would have us believe, I would go further, and assert that there have been until now no - nor will ever be - discernible costs of any global warming now or in the future. For example, the latest American Economic Review has a paper by Deschenes & Greenstone confirming the earlier work by Mendelsohn and Nordhaus demonstrating that climate change has until now been on balance beneficial for agriculture in the USA; and only today I was alerted by a friend to a paper by Chapman, Chapman et al in the Journal of Tropical Ecology 2005 (21.1) describing how an increase of 3.5 in the average max. temp in Uganda's Kibale National Park since 1980 has been accompanied by an INCREASE in rainfall of 300 mm a year with less frequent droughts, contrary to the Stern Review's forecasts of more and worse droughts in Africa (comprehensively demolished by Will Alexander in his forthcoming paper and upcoming presentations at Parliament House in Canberra (20th June 3.45 pm) and Melbourne (30th June). So yes, I do indeed see emissions stabilisation as being a total deadweight loss that our grandchildren will bitterly rue if we achieve it - luckily for them we won't, already the UK is contemplating a return to coal power to replace the 20% of its energy that is nuclear, just like Germany's new $2 billion coal power station in the Ruhr. When Rudd and the Greens do not actually believe in AGW, or rate it lower than nuclear purity, why should the rest of us inconvenience ourselves?
Tim C.
Good god, you can even use a search engine properly! Try looking at the 1st & 4th items!
P.S. Still not admitting your mistake given Richard Tol's comment above?
So Tim C., if Richard Tol agrees with Tim L.; Dano and Meyrick in his reading of Stern, does that mean that he too is a "cretin"?
Good lord it's Polymath Pangloss Curtin, internets legend, again! And again ...
Dear all, please show me the error when I said at the beginning (responding to Quiggin's claim that Alan Oxley had confused levels with growth rates), "the cost of 1% of GDP (say $1 on $100) is the same as the difference between a 3% growth and a 4% growth ie. $4-$3 = $1 everywhere except UQ and UNSW. Stern said the cost is 1% of GDP p.a.; that is a rate, not a level..." . With global GDP at $35,000 in 2005, the difference between 2.5% growth of GDP in 2006 and 2.49% growth of GDP in 2006, which is what Stern claims is the cost of stabilising emissions, is just $3.5 billion, not the 1$ of global GDP in 2005 at $350 billion which Stern also states would have been the cost of starting to stabilise emissions in 2006 (p.278). Stern further states that by 2050 "the global cost of reducing total GHG emisions ... is estimated at around $1 trillion in 2050 or 1% of GDP in that year"(p.200). But the difference in GDP growing at @ 2.5% p.a. from now till 2050 and @ 2.49% in 2050 is $466 biliion, NOT $1 trillion. Where is my error? It is Stern who confused rates with levels: neither of his poiht estimates of the costs as being 1% of GDP whether in 2006 or 2050 are equal to the difference between 2.5% and 2.49% growth in those years.
TimC, please read Richard Tol's post #88 above:
_What he means to argue is that the costs of stabilising at 550 ppm CO2eq is EQUIVALENT to lowering GDP TODAY by 1%, while keeping the same growth rate, so that GDP in all future years is also lower by 1%._
Capisce?
Munin: sapio. That is what Oxley and I said at the beginning. Stern's 2.5% and 2.49% growth rates with and without mitigation do not produce costs of 1% of GDP at any time until after 2100. And when he does allow for costs of 1% of GDP, the estimates are based on wishful thinking, as the cost per tonne of CO2 abated falls magically from $100 now to $22 by 2050 (p.261). Stern's early career was based on his mastery of the Little-Mirlees shadow pricing cost-benefit model, where market prices are replaced by whatever they thought of over breakfast, and his Review is litle different.
If you want to express Stern's cost estimates as a reduction in growth rates, you would have to follow his procedure. That is, compute that reduction in steady state growth that is equivalent to a 1% reduction in the net present value.
With Stern's time horizon (50 years for emission reduction), utility discount rate (0.1%) and risk aversion (linear for costs of emission reduction), I find that the economic growth rate falls from 2.00% per year to 1.96%. That implies a reduction in GDP of 2% in 2050 and 4% in 2100.
Tim C.,
Calculate two equations: $100 compouding at 3% for fifty years and $99 compounding at 4% for 50 years.
Oh and while we're at it, is Stern's 5% of GDP cost estimate a one-off cost or a 5% per annum reduction in the rate of growth?
A quick reality check on Richard and Tim C.'s predictions of doom:
http://www.technologynewsdaily.com/node/7107
"U.S. carbon dioxide emissions from burning fossil fuels decreased by 1.3 percent in 2006, from 5,955 million metric tons of carbon dioxide (MMTCO2) in 2005 to 5,877 MMTCO2 in 2006, according to preliminary estimates released today by the Energy Information Administration (EIA).
The economy, as measured by Gross Domestic Product (GDP), grew by 3.3 percent and energy demand fell by 0.9 percent indicating that energy intensity (energy use per unit of GDP) fell by 4.2 percent. Carbon dioxide intensity (CO2 emission per unit of GDP) fell by 4.5 percent.
Factors that drove emissions lower include weather conditions that reduced the demand for heating and cooling services; higher energy prices for natural gas, motor gasoline, and electricity, that reduced energy demand; and the use of a less carbon-intensive fuel mix (more natural gas and non-carbon fuels) in the generation of electricity.
Through 2006, total U.S. energy-related carbon dioxide emissions have grown by 17.9 percent since 1990. Energy-related carbon dioxide emissions account for over 80 percent of U.S. greenhouse gas emissions.
At the energy-sector level, preliminary data indicate that:
* Carbon dioxide emissions from the residential and commercial sectors decreased by 3.7 percent and 1.0 percent respectively in 2006, as heating degree-days declined by 7.4 percent, while at the same time cooling degree-days decreased by almost 1 percent.
* Industrial emissions fell by 1.2 percent in 2006. Since 2004 emissions attributable to the industrial sector have fallen by almost 4 percent despite growth in industrial output.
* Transportation-related carbon dioxide emissions, which account for about a third of total carbon dioxide emissions, decreased by 0.1 percent in 2006."
Dear Ian Gould
People who ask rhetorical questions already know the answer they want.
1. But to try and be helpful, global GDP is not some kind of escalator that compounds automatically year after year; if it was there would be no poverty etc etc. Every year policy makers and their subjects face choices. Whatever your income last year, allocating 1% of it to useless activity is likely to reduce its potential growth this year (something called saving and investment versus say drink and drugs). Modern GDP estimates use chain measures whereby in effect last years's income is always rebased to 100, so that in effect 1% of that is always the difference between 1 or 2% growth or 3 and 4% .....where the 1% is say the general price increase (as Stern acknowledges).
2. Why not ask the Great Man himself, he is not very busy these days? What he said here and there in his Review, but sometimes not, the 5% is a "now and forever reduction" in annual GDP, or to use his own words, on page xv of his Summary of Conclusions (which you have previously discounted as being wholly in error vis a vis the body of the Review) "the overall costs and risks of climate change will be equivalent (sic) to losing at least 5% of global GDP EACH YEAR, NOW AND FOREVER". What do you think that means? However as Richard Tol has explained here and elsewhere, it is persiflage, based on his special discounting technique whereby the rate changes according to the political/spin objective in mind. Thus Tol has shown that the 5% is like an annuity, but counting backwards from the future (including a high probability of extinction of the species by 2100).
Can I ask you if you think Stern means that GDP of 100 last year that would have been 103 this year but for CC, will actually be 98? Somehow this has not happened in Australia so far, but no doubt this exception 'proves' Stern's rule (were it not for Popper).
Tim,
When Stern talks about a 1% reduction in annual income, I assume he means 1% reduction in annual income. When he talks about a 5% reduction in annual income I assuem he means a 5% reduction in annual income.
You, on the other hand, choose to interpret the first statement as a 1% reduction in growth rates and the second as a 5% reduction in annual income.
Tim C: "Modern GDP estimates use chain measures whereby in effect last years's income is always rebased to 100, so that in effect 1% of that is always the difference between 1 or 2% growth or 3 and 4% .....where the 1% is say the general price increase (as Stern acknowledges)."
Sorry, Tim, growth IS compound. Rebasing the price index annually rather than with reference to a base year no more changes that fact than switching between Fahrenheit and Celsius measurement changes the temperature.
http://www.aph.gov.au/library/pubs/mesi/features/chain.htm
Chain Volume Measures
SNA93 recommends that this rebasing should be done annually and the ABS will now follow some of the world's leading statistical agencies by adopting this recommendation. As with constant price estimates, chain volume measures will be expressed in dollar terms.
By rebasing annually, chain volume measures will always provide price relativities that reflect the current situation. This will provide better real estimates, especially in times of rapidly changing relative prices.
Chain volume measures are derived by linking together (compounding) movements in volumes, calculated using the average prices of the previous financial year, and applying the compounded movements to the current price estimates of the reference year.(2)
This annual rebasing will mean that each year the chain volume measures will have a different base year. The base year will always be the previous complete financial year. With the release of the September quarter 1998 data the base year will be 1996-97. The release of June quarter 1999 figures will have a base year of 1997-98 and the base year will change each year with the release of the June quarter data.
When a new base year is introduced the level of the chain volume measures series will change but the growth rates will remain unaltered unless caused by other factors.
http://www.abs.gov.au/AUSSTATS/abs@archive.nsf/log?openagent&5206001_ke…
Anyone interested in whether GDP (in chain value measurement terms) increases at a linear or compounding rate can do the math using the data in column R of the spreadsheet linked to above.
To be frank, it's late and I'm tired and I don;t propose to do so myself tonight.
A correction - the correct basis for comparison is column V.
Compare the March 1997 and March 2007 quarters.
The cumulative total of the quarterly growth periods over that period (from colum b) is 36.3%. But March 2007 real GDP is 48.2% higher than March 1997.
The difference is attributable to the effect of compounding.
And a correction to the correction (sure proof it's too late for me).
Column R is actually the correct comparion and gives a similar result a 42% gowth in GDP.
Oh and Tim, how does your noncompounding theory of GDP reconcile with the compound growth in human populations (said growth being one of the main drivers of GDP).
Dear Ian Gould:
Your #103: This all very semantic. But if my income goes up 4% this year only for some idiotic government to charge a climate change levy (aka tax) of 1% (as already applies in the UK), then my income has only gone up 3%.
#104 Agreed.
# 105 Agreed, I too am on orders from my dog amongst others to head for bed.
#106 Possibly
#107 Not understood, but in general life is not an annuity, with a sure yield from a single investment at birth. We move on from year to year. Some waste their inheritance/income, some (alas all of us under Rudd's instant emissions cap & trading) have it taxed away, and then our incomes go down year on year from what they might have been. Contrary to general belief here, GREG MANKIW IS RIGHT, AND STERN IS WRONG, annual increases in prices reduce annual real income.
Finally, you are right about people (who breathe out CO2 all the time), the most perfect correlation is between population growth and CO2 accumulation since 1780. That is why Flannery and other philanthropists like Ehrlich want the population reduced by at least 50% (themselves excluded of course).
But Tim, I'm sure our CO2 production has been more than balanced by our extermination of large mammals.
Failing that, maybe you might like to calculate how much CO2 each person puts out when breathing, and also explain away the isotope changes.
Finally, I look forwards to you doing something about all these increasing prices I see, from houses to health care.
Guthrie: I'm hoping you're being sarcastic, because you're showing a remarkable ignorance to high school Science lessons regarding the Carbon Cycle (which was taught in school long before global warming became the hot-button political issue it is now)
Animals and forest fires: carbon from plants, which came out of the atmosphere to begin with. Fossil fuels: Carbon that has been locked out of the system for millions of years, added quickly and in massive quantities.
When Tim invokes the "people who disagree with me want to commit genocide" argument you know he's exhausted every other line of argument.
Is there an Ehrlich's rule/Malthus moment for environment-haters such that the thread ends?
Best,
D
Dear Ian Gould:
1.Your #101 asked "is Stern's 5% of GDP cost estimate a one-off cost or a 5% per annum reduction in the rate of growth?" I replied, citing Stern at p.xv, "the overall costs and risks of climate change will be equivalent (sic) to losing at least 5% of global GDP EACH YEAR, NOW AND FOREVER". So the correct answer is that the 5% is neither one-off nor a reduction in growth. Stern here implies it is an absolute amount that will however grow as GDP grows, so this year's GDP will be 5% less, at 97.85 if global GDP is up 3% on last year, and next year if base GDP is 103 and grows at 3%, then net GDP next year will be 106.09, less 5%, for 100.79, and so on, and by 2050 the index of base GDP would be 367 (2006=100) and the net GDP would be 348 (95% of base). But this is a convenient deception. If climate change imposes a cost at 5% of GDP in 2007, then base GDP logically will 97.85 not 103 this year, which is what grows at 3% only to incur another 5% loss, leading rapidly to zero GDP. That is why Stern's damage estimate is fixed at 5% flat rather than on a declining balance - but then his 5% implies at most a rather trivial loss by 2050. For example, given Australia's per capita income at March 2007 of $12,063, growing at 3% pa it will reach $45,262 by 2050, or a still very gratifying $43,000 allowing for the 5% cost of climate change. But does it make sense to say that we incur a cost of 5% without that feeding through to next year's income? Asked to vote now for wearing that annual but non-material loss, or incurring the real costs of higher energy prices, which way would you go? Your own citation of the US data at #101 showing lower heating AND cooling energy usage etc in the States may suggest why even a Clinton/Obama presidency may not be able to get Congress to ratify Kyoto.
As for population growth, it was certainly not a "driving force for GDP growth" in sub-Saharan Africa from 1965 to 2001.
Tim, wrt population growth compare growth in per capita GDP in the US and EU. The two figures are virtually identical, the superior growth in America's headline GDP numbers is almost wholely attributable to its faster populaton growth.
Ian, we financed that in China.
Left wing fox, my first sentence was most definitely sarcastic.
TL: You are the one who neds to stay away from economics, in which you unlike me (M.Sc Econ.)have no qualifications, and even less in maths: a cost of 1% of GDP (say $1 on $100) is the same as the difference between a 3% growth and a 4% growth ie. $4-$3 = $1 everywhere except UQ and UNSW. Stern said the cost is 1% of GDP p.a.; that is a rate, not a level except in JQ's classes
Tim L; "Err, Tim C: even Richard Tol said you were wrong". When where? Not here - in fact he sent me his paper noting Stern's non-Newtonian (or Leibnizian) calculus AFTER I had pointed out on this very thread Stern's claim that average cost of mitigation could stay flat even if marginal cost rose (a plain impossibility to N and L and everybody else in the world except to you and your egregious mates).
But then you are as ever incapable of addressing the substance. What is in fact (or math) wrong with my previous post? Surely you can rise above Dano's bluster and show where I was wrong. But since you have yet to admit that a 1% reduction in GDP growth from say 4% implies 3% growth, I know you cannot.
Tim Lambert and Meyrick Kirby
You keep saying I made some grotesque error, eg "Stern gives the cost as 1% of GDP, not as a 1 percentage point reduction in growth rates as Oxley asserts. Please stay away from arguments about economics in future." Tim Lambert | May 28, 2007 11:01 PM
Ever hopeful let my try again. Stern himself says in his Summary of Conclusions that "central estimates of the ANNUAL COSTS of achieving stabilisation between 500 and 550 ppm CO2e are around 1% of GDP" (p.xvi, my caps). If I am in error so is Stern, but I am entitled to base myself on his Conclusions. It is true that elsewhere Stern implies that the total cost of stabilisation to 2100 is just 1% of global GDP in 2006, or US$350 billion. That absurd claim is what triviliases his cost benefit analysis. Increases of 100% in the wholesale price of electricity in much of Australia over the last year because of the drought are comparable to a carbon price of A$40 per tonne, and are said (in today's Australian, report by Mike Steketee) to be likely to lead to increases in the CPI of up to 1.5%, already above Stern's ceiling. Stern's own shadow price of carbon is US$314 per tonne, which suggests an impact on the CPI of as much as 10%, not Stern's 1% once and for all. BTW, Stern employs various strategems to achieve his low cost estimates, including the assumption that "private households with employed persons" use no energy at all (p.297).
TL: You are the one who neds to stay away from economics, in which you unlike me (M.Sc Econ.)have no qualifications, and even less in maths: a cost of 1% of GDP (say $1 on $100) is the same as the difference between a 3% growth and a 4% growth ie. $4-$3 = $1 everywhere except UQ and UNSW. Stern said the cost is 1% of GDP p.a.; that is a rate, not a level except in JQ's classes
Tim L; "Err, Tim C: even Richard Tol said you were wrong". When where? Not here - in fact he sent me his paper noting Stern's non-Newtonian (or Leibnizian) calculus AFTER I had pointed out on this very thread Stern's claim that average cost of mitigation could stay flat even if marginal cost rose (a plain impossibility to N and L and everybody else in the world except to you and your egregious mates).
But then you are as ever incapable of addressing the substance. What is in fact (or math) wrong with my previous post? Surely you can rise above Dano's bluster and show where I was wrong. But since you have yet to admit that a 1% reduction in GDP growth from say 4% implies 3% growth, I know you cannot.
Tim Lambert and Meyrick Kirby
You keep saying I made some grotesque error, eg "Stern gives the cost as 1% of GDP, not as a 1 percentage point reduction in growth rates as Oxley asserts. Please stay away from arguments about economics in future." Tim Lambert | May 28, 2007 11:01 PM
Ever hopeful let my try again. Stern himself says in his Summary of Conclusions that "central estimates of the ANNUAL COSTS of achieving stabilisation between 500 and 550 ppm CO2e are around 1% of GDP" (p.xvi, my caps). If I am in error so is Stern, but I am entitled to base myself on his Conclusions. It is true that elsewhere Stern implies that the total cost of stabilisation to 2100 is just 1% of global GDP in 2006, or US$350 billion. That absurd claim is what triviliases his cost benefit analysis. Increases of 100% in the wholesale price of electricity in much of Australia over the last year because of the drought are comparable to a carbon price of A$40 per tonne, and are said (in today's Australian, report by Mike Steketee) to be likely to lead to increases in the CPI of up to 1.5%, already above Stern's ceiling. Stern's own shadow price of carbon is US$314 per tonne, which suggests an impact on the CPI of as much as 10%, not Stern's 1% once and for all. BTW, Stern employs various strategems to achieve his low cost estimates, including the assumption that "private households with employed persons" use no energy at all (p.297).
TL: You are the one who neds to stay away from economics, in which you unlike me (M.Sc Econ.)have no qualifications, and even less in maths: a cost of 1% of GDP (say $1 on $100) is the same as the difference between a 3% growth and a 4% growth ie. $4-$3 = $1 everywhere except UQ and UNSW. Stern said the cost is 1% of GDP p.a.; that is a rate, not a level except in JQ's classes
Tim L; "Err, Tim C: even Richard Tol said you were wrong". When where? Not here - in fact he sent me his paper noting Stern's non-Newtonian (or Leibnizian) calculus AFTER I had pointed out on this very thread Stern's claim that average cost of mitigation could stay flat even if marginal cost rose (a plain impossibility to N and L and everybody else in the world except to you and your egregious mates).
But then you are as ever incapable of addressing the substance. What is in fact (or math) wrong with my previous post? Surely you can rise above Dano's bluster and show where I was wrong. But since you have yet to admit that a 1% reduction in GDP growth from say 4% implies 3% growth, I know you cannot.
Tim Lambert and Meyrick Kirby
You keep saying I made some grotesque error, eg "Stern gives the cost as 1% of GDP, not as a 1 percentage point reduction in growth rates as Oxley asserts. Please stay away from arguments about economics in future." Tim Lambert | May 28, 2007 11:01 PM
Ever hopeful let my try again. Stern himself says in his Summary of Conclusions that "central estimates of the ANNUAL COSTS of achieving stabilisation between 500 and 550 ppm CO2e are around 1% of GDP" (p.xvi, my caps). If I am in error so is Stern, but I am entitled to base myself on his Conclusions. It is true that elsewhere Stern implies that the total cost of stabilisation to 2100 is just 1% of global GDP in 2006, or US$350 billion. That absurd claim is what triviliases his cost benefit analysis. Increases of 100% in the wholesale price of electricity in much of Australia over the last year because of the drought are comparable to a carbon price of A$40 per tonne, and are said (in today's Australian, report by Mike Steketee) to be likely to lead to increases in the CPI of up to 1.5%, already above Stern's ceiling. Stern's own shadow price of carbon is US$314 per tonne, which suggests an impact on the CPI of as much as 10%, not Stern's 1% once and for all. BTW, Stern employs various strategems to achieve his low cost estimates, including the assumption that "private households with employed persons" use no energy at all (p.297).