Economic v Climate Models

Luboš Motl has a polemical look at the supposed refutation of a sceptics arguments. This is an extended version of my comment.

Might I offer an alternative view of item 30 – economic v climate models?

Economic models are different from climate models. They try to model empirical generalisations and (with a bit of theory & a lot of opinion) try to forecast future trends. They tend to be best over the short term when things are pretty much the same from one year to the next. The consensus of forecasts are pretty useless at predicting discontinuities in trends, such as the credit crunch. At there best their forecasts at little better than the dumb forecast that next period will be the same as last period. In general the accuracy of economic forecasts is inversely proportional to their utility.

Climate models are somewhat different according to Dr MacCracken.

“In physical systems, we do have a theory—make a change and there will be a response in largely understandable and calculatable ways. Models don’t replace theory; their very structure is based on our theoretical understanding, which is why they are called theoretical models. All that the computers do is to very rapidly make the calculations in accord with their theoretical underpinnings, doing so much, much faster than scientists could with pencil and paper.”

The good doctor omits to mention some other factors. It might be the case that climate scientists have all the major components of the climate system (though clouds are a significant problems), but he omits to include measurements. The interplay of complex factors can cause unpredictable outcomes depending on timing and extent, as well as the theory. The climate models, though they have a similarity of theory and extent, come up with widely different forecasts. Even this variation is probably limited by sense-checking the outcomes and making ad hoc adjustments. If the models are basically correct then major turning points should capable of being predicted. The post 1998 stasis in temperatures, the post 2003 stability in sea temperatures and the decline in hurricanes post Katrina are all indicators that models are overly sensitive. The novelty that the models do predict tend not to be there, but the novelties that do exist are not predicted.

If it is the case that climate models are still boldly proclaiming a divergency from trend, whilst economic models have much more modest in their claims, is this not an indicator of climate model’s superiority? It would be if one could discount the various economic incentives. Economic models are funded by competing in institutions. Some are private sector, and some are public sector. For most figures there is forecast verification monthly (e.g. inflation, jobs) or quarterly (growth). If a model were consistently an outlier if would lose standing, as the forecasts are evaluated against each other. If it was more accurate then the press would quote it, being good name placement for the organisation. In the global warming forecasts, there is not even an annual variation. The incentive is either to conform, or to provide more extreme (it is worse than we thought) prognostications. If the model projected basically said “chill-out, it ain’t that bad man”, they authors would be ostracized and called deniers. At a minimum the academics would lose status and ultimately lose out on the bigger research grants.

(A more extreme example is of a major earthquake forecast. “There will not be one today” is a very accurate prediction. In the case of Tokyo area over the last 100 years that would have been wrong only twice, an accuracy of greater than 1 in 10,000).

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1 Comment

  1. It’s even more worser than that! The fundamental claim that warming would be a (mega-deadly, hyper-disastrous) problem has only the vaguest of hand-waving special pleadings to back it up. Historically, warming periods have been exceedingly beneficial, while cooling has been harshly damaging. Acknowledging that would eliminate the motivation for funding and ‘global governance’ right at the get-go.


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