William Nordhaus | |
|---|---|
.jpg) Nordhaus in Stockholm, December 2018 | |
| Born | William Dawbney Nordhaus (1941-05-31)May 31, 1941 (age 84)[2] Albuquerque,New Mexico, U.S. |
| Education | Yale University (BA,MA) Sciences Po Massachusetts Institute of Technology (PhD) |
| Awards | BBVA Foundation Frontiers of Knowledge Award (2017) Nobel Memorial Prize in Economic Sciences (2018) |
| Scientific career | |
| Fields | Environmental economics |
| Institutions | Yale University |
| Thesis | A theory of endogenous technological change (1967) |
| Doctoral advisor | Robert Solow[1] |
William Dawbney Nordhaus (born May 31, 1941) is an American economist. He was aSterling Professor of Economics atYale University, best known for his work ineconomic modeling andclimate change, and a co-recipient of the 2018Nobel Memorial Prize in Economic Sciences.[3] Nordhaus received the prize "for integrating climate change into long-runmacroeconomic analysis".[4]
Nordhaus was born inAlbuquerque,New Mexico, the son of Virginia (Riggs) and Robert J. Nordhaus,[5] who co-founded theSandia Peak Tramway.[6][7] Robert J. Nordhaus was from aGerman Jewish family – his father Max Nordhaus (1865–1936) had immigrated fromPaderborn in 1883, and became a manager of The Charles Ilfeld Company branch in Albuquerque.[8][9]
Nordhaus graduated fromPhillips Academy inAndover and subsequently received hisBA andMA fromYale in 1963 and 1972, respectively, where he was a member ofSkull and Bones.[10] He also holds a Certificate from theInstitut d'Etudes Politiques (1962) and aPhD fromMIT (1967).[10][11][12] He was a visiting fellow ofClare Hall, Cambridge in 1970–1971. He has been a member of the faculty at Yale since 1967, in both the Economics department and the School of the Environment.[12][13] Nordhaus also served as itsProvost from 1986 to 1988 and its vice president for finance and administration from 1992 to 1993. He has been on theBrookings Panel on Economic Activity since 1972. During theCarter administration, from 1977 to 1979, Nordhaus was a member of theCouncil of Economic Advisers.[12]
Nordhaus was elected to theAmerican Philosophical Society in 2013.[14] He served as the chairman of the board of directors of theFederal Reserve Bank of Boston between 2014 and 2015.[15]
Nordhaus lives inNew Haven,Connecticut, with his wife, Barbara, a social worker recently retired from theYale Child Study Center.[12]
Nordhaus is the author or editor of over 20 books. One of his early works is the wildly popular introductory textbook,Economics, co-authored withPaul Samuelson. Originally a project of Samuelson's alone, Nordhaus worked on the textbook from the 12th edition until the 19th (the most recent edition), starting in 1985.[16][17] The book was first published in 1948 and has appeared in nineteen different editions and seventeen different languages since then. It was a best-selling economics textbook for decades and is still extremely popular today.Economics has been called a "canonical textbook", and the development of mainstream economic thought has been traced by comparing the nineteen editions over the 1948–2010 period.[18]
Nordhaus has also written several books onglobal warming andclimate change, one of his primary areas of research. Those books include,Managing the Global Commons: The Economics of Climate Change (1994), which won the 2006 award for "Publication of Enduring Quality" from theAssociation of Environmental and Resource Economists. Other notable books include,Warming the World: Economic Models of Global Warming (2000), co-authored with Joseph Boyer;The Climate Casino: Risk, Uncertainty, and Economics for a Warming World;[19] andThe Spirit of Green: The Economics of Collisions and Contagions in a Crowded World (2021).
In 1972, Nordhaus, along with fellow Yale economics professorJames Tobin, published, "Is Growth Obsolete?",[20] an article that introduced the Measure of Economic Welfare (MEW), orIndex of Sustainable Economic Welfare (ISEW), as the first attempt to developenvironmental accounting.
Nordhaus is also known for his critique of current measures of national income. For example, in a 1996 article, he wrote,[21]
If we are to obtain accurate estimates of the growth of real incomes over the last century, we must somehow constructprice indexes that account for the vast changes in the quality and range of goods and services that we consume, that somehow compare the services of horse with automobile, ofPony Express withfacsimile machine, ofcarbon paper withphotocopier, of dark and lonely nights with nights spent watching television, and of brain surgery withmagnetic resonance imaging.
EconomistFilip Palda summarizes the importance of Nordhaus's insight when he writes,[22]
The practical lesson to be drawn from this fascinating study of lighting is that the way we measure theconsumer price index is severely flawed. Instead of putting goods and their prices directly into the index we should reduce all goods to their constituent characteristics. Then we should evaluate how these goods can best be combined to minimize the cost of consuming these characteristics. Such an approach would allow us to include new goods in the consumer price index without worrying about whether the index of today is comparable to that of ten years ago when the good did not exist. Such an approach would also allow governments to more precisely calculate the rate at whichwelfare and other forms of aid should be increased. At present, such calculations tend to overestimate thecost of living because they do not take into account the manner in which increases in quality reduce the monetary cost of maintaining a certain standard of living.
Nordhaus has written on theeconomics ofclimate change. He is the developer of theDICE and RICE models,integrated assessment models of the interplay between economics, energy use, and climate change. InReflections on the Economics of Climate Change (1993), he writes,[23]
Mankind is playing dice with the natural environment through a multitude of interventions–injecting into the atmosphere trace gases like thegreenhouse gases orozone-depleting chemicals, engineering massiveland-use changes such asdeforestation, depleting multitudes of species in their natural habitats even while creatingtransgenic ones in the laboratory, and accumulating sufficientnuclear weapons to destroy human civilizations.
According to theclimate change models Nordhaus has developed, sectors of the economy that depend heavily on unmanagedecosystems–that is, are heavily dependent upon naturally occurring rainfall, runoff, or temperatures–will be most sensitive to climate change, generally.Agriculture,forestry,outdoor recreation, and coastal activities fall in this category.[23] Nordhaus takes seriously the potentially catastrophic impacts of climate change.[24]
In 2007, Nordhaus, who has done several studies on theeconomics of global warming, criticized theStern Review for its use of a lowdiscount rate, writing,[25]
The Review's unambiguous conclusions about the need for extreme immediate action will not survive the substitution of discounting assumptions that are consistent with today's market place. So the central questions about global-warming policy–how much, how fast, and how costly–remain open. The Review informs but does not answer these fundamental questions.
In 2013, Nordhaus chaired a committee of theNational Research Council that produced a report discounting the impact offossil fuel subsidies ongreenhouse gas emissions.[26]
In 2015, Nordhaus published an article promulgating his concept of a "climate club".[27] This publication has become widely debated and cited within and outside economics.[28] He conceptualizes this as a coalition of the willing among countries that wish to adopt more stringent climate mitigation policies. The climate club introducescarbon pricing among the club's member states and levies a fee on all imports of goods from countries that are outside the club and have not introduced similar carbon pricing.[29] It has been argued that the carbon border adjustment mechanism (CBAM) of theEuropean Union could become a climate club.[30][31][32] A 2025 paper inEconometrica found the kind of climate club that Nordhaus advocated for, with border taxes to deter free-riding, "can achieve 33–68% of the globally optimal carbon reduction, depending on the initial coalition (EU, EU + US, or EU + US + China)."[33]
In a January 2020 interview withNeue Zürcher Zeitung, Nordhaus claimed that achieving the 2 °C goal of theParis agreement was "impossible", stating that, "even if we make the fastest possible turn towardszero emissions, CO2 will continue to accumulate in the atmosphere, because we cannot simply shut down our economy". He asserted that he was not alone in making this assessment, claiming that half of the simulations arrived at the same conclusion. He also remarked that the two-degree target was set without reference to the costs of meeting the target.[34][35]
Among many honors, he is a Member of theUnited States National Academy of Sciences, the American Philosophical Society, and an Elected Fellow of theAmerican Academy of Arts and Sciences.[12] He has been a foreign member of theRoyal Swedish Academy of Engineering Sciences since 1999. He was awarded theDaniel Patrick Moynihan PrizeArchived July 12, 2021, at theWayback Machine by theAmerican Academy of Political and Social Science in 2020.
In 2004, Nordhaus was designated a Distinguished Fellow of theAmerican Economic Association (AEA), along withGeorge P. Shultz andWilliam A. Brock.[36] The accompanying AEA statement referred to his "knack for asking large questions about the measurement ofeconomic growth andwell-being, and addressing them with simple but creative insights," among them, his pioneering work on thepolitical business cycle,[37] ways of usingnational income accounts data to devise economic measures reflecting better health, increases in leisure andlife expectancy, and "constructing integrated economic and scientific models to determine theefficient path for coping with climate change".[38] In 2013, Nordhaus became president-elect of the AEA, and served as the association's president between 2014 and 2015.[39][15]
Nordhaus was awarded theNobel Memorial Prize in Economic Sciences in 2018, which he shared withPaul Romer.[15] In detailing its reasons for giving the prize to Nordhaus, theRoyal Swedish Academy of Sciences specifically recognized his efforts to develop "anintegrated assessment model, i.e. a quantitative model that describes the global interplay between the economy and the climate. His model integrates theories and empirical results from physics, chemistry and economics. Nordhaus' model is now widely spread and is used to simulate how the economy and the climate co-evolve."[4]
Many of the news outlets that reported on Nordhaus's prize noted that he was in the early wave of economists who embraced acarbon tax as a preferred method ofcarbon pricing.[40][41] Some climate scientists and commentators were disappointed with the Nobel Prize going to Nordhaus due to his embrace of substantially lower carbon taxes per ton than most scientists, along with his past history of arguing for low carbon taxes.[42]
The Nobel Foundation described Nordhaus's work as follows: "William Nordhaus's findings deal with interactions between society, the economy and climate change. In the mid-1990s, he created a quantitative model that describes the global interplay between the economy and the climate. Nordhaus's model is used to examine the consequences of climate policy interventions, for example carbon taxes." Additionally, the Nobel Prize announcement commented that Nordhaus had "significantly broadened the scope of economic analysis by constructing models that explain how the market economy interacts with nature."[43] In an evaluation of the work, Lint Barrage summarizes its impact, stating that the "body of work also represents science at its best: integrative across disciplines, visionary in scope yet incremental in progress, transparent, and producing knowledge for the benefit of humankind."[44]
Critics of Nordhaus's DICE model focus on several aspects. One of the most important, incorporating political and moral philosophy, is the use ofdiscounting, with an early study by William Cline.[45] Another branch, represented byRobert Pindyck, holds that integrated assessment models cannot capture the complexity of the climate-economy nexus.[46] Nicholas Stern argued that the damage function does not capture many of the most important risks to society.[47] A particularly important critique, developed byMartin Weitzman, is that the economy-climate system may have "fat tails" and therefore inadequately deal with low probability, high consequence outcomes.[48]
In an article by Christopher Ketcham inThe Intercept[49] there are a number of critical insights and critical views of Nordhaus' methods and assumptions, which didn't recognise or value tipping-cascades or non-elastic eco and environmental risk.
Post-Keynesian economistSteve Keen criticises the economics of climate change generally and the 2018 work by Nordhaus in particular:"economists made their own predictions of damages, using three spurious methods: assuming that about 90% of GDP will be unaffected by climate change, because it happens indoors; using the relationship between temperature and GDP today as a proxy for the impact of global warming over time; and using surveys that diluted extreme warnings from scientists with optimistic expectations from economists."When specifically speaking about Nordhaus, he says that "Nordhaus has misrepresented the scientific literature to justify the using a smooth function to describe the damage to GDP from climate change. Correcting for these errors makes it feasible that the economic damages from climate change are at least an order of magnitude worse than forecast by economists, and may be so great as to threaten the survival of human civilization."[50][51]
Mr Nordhaus was an early advocate of carbon taxes, but the committee noted that the models he developed also allowed policymakers to calculate quantitative paths for the best tax showing how they would depend on [assumptions regarding the values of disparate climate and economic variables].
The Yale economist William D. Nordhaus has spent the better part of four decades trying to persuade governments to address climate change, preferably by imposing a tax on carbon emissions. His careful work has long since convinced most members of his own profession . ...
Media related toWilliam Nordhaus at Wikimedia Commons
Quotations related toWilliam Nordhaus at Wikiquote
including the Prize LectureClimate Change: The Ultimate Challenge for Economics| Academic offices | ||
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| Preceded by | President of theAmerican Economic Association 2014– 2015 | Succeeded by |
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| Preceded by | Laureate of the Nobel Memorial Prize in Economics 2018 | Succeeded by |
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