William Nordhaus

William Nordhaus
William Dawbney Nordhaus (born May 31, 1941) is an American economist, a Sterling Professor of Economics at Yale University, best known for his work in economic modeling and climate change, and a co-recipient of the 2018 Nobel Memorial Prize in Economic Sciences. Nordhaus received the prize "for integrating climate change into long-run macroeconomic analysis".
Education and career
Nordhaus was born in Albuquerque, New Mexico, the son of Virginia (Riggs) and Robert J. Nordhaus, who co-founded the Sandia Peak Tramway. Robert J. Nordhaus was from a German Jewish family – his father Max Nordhaus (1865–1936) had immigrated from Paderborn in 1883, and became a manager of The Charles Ilfeld Company branch in Albuquerque.
Nordhaus graduated from Phillips Academy in Andover and subsequently received his BA and MA from Yale in 1963 and 1972, respectively, where he was a member of Skull and Bones. He also holds a Certificate from the Institut d'Etudes Politiques (1962) and a PhD from MIT (1967). He was a Visiting Fellow of Clare Hall, Cambridge in 1970–1971. He has been a member of the faculty at Yale since 1967, in both the Economics department and the School of the Environment. Nordhaus also served as its Provost from 1986–1988 and its Vice President for Finance and Administration from 1992–1993. He has been on the Brookings Panel on Economic Activity since 1972. During the Carter administration, from 1977–1979, Nordhaus was a member of the Council of Economic Advisers.
Nordhaus was elected to the American Philosophical Society in 2013. He served as the chairman of the board of directors of the Federal Reserve Bank of Boston between 2014 and 2015.
Nordhaus lives in New Haven, Connecticut, with his wife, Barbara, a social worker recently retired from the Yale Child Study Center.
Contributions to economics and the study of climate change
Nordhaus is the author or editor of over 20 books. One of his early works is the wildly popular introductory textbook, Economics, co-authored with Paul 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. 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.
Nordhaus has also written several books on global warming and climate 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 the Association 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; and The Spirit of Green: The Economics of Collisions and Contagions in a Crowded World (2021).
In 1972, Nordhaus, along with fellow Yale economics professor James Tobin, published, "Is Growth Obsolete?", an article that introduced the Measure of Economic Welfare (MEW), or Index of Sustainable Economic Welfare (ISEW), as the first attempt to develop environmental accounting.
Nordhaus is also known for his critique of current measures of national income. For example, in a 1996 article, he wrote,
Economist Filip Palda summarizes the importance of Nordhaus's insight when he writes,
Contributions on economics of climate change
Nordhaus has written on the economics of climate change. He is the developer of the DICE and RICE models, integrated assessment models of the interplay between economics, energy use, and climate change. In Reflections on the Economics of Climate Change (1993), he writes,
According to the climate change models Nordhaus has developed, sectors of the economy that depend heavily on unmanaged ecosystems–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. Nordhaus takes seriously the potentially catastrophic impacts of climate change.
In 2007, Nordhaus, who has done several studies on the economics of global warming, criticized the Stern Review for its use of a low discount rate, writing,
In 2013, Nordhaus chaired a committee of the National Research Council that produced a report discounting the impact of fossil fuel subsidies on greenhouse gas emissions.
In a January 2020 interview with Neue Zürcher Zeitung, Nordhaus claimed that achieving the 2 °C goal of the Paris agreement was "impossible", stating that, "even if we make the fastest possible turn towards zero emissions, 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 simulation arrived at the same conclusion. He also remarked that the two-degree target was set without reference to the costs of meeting the target.
Honors
Scientific and engineering academies
Among many honors, he is a Member of the United States National Academy of Sciences, the American Philosophical Society, and an Elected Fellow of the American Academy of Arts and Sciences. He has been a foreign member of the Royal Swedish Academy of Engineering Sciences since 1999. He was awarded the Daniel Patrick Moynihan Prize by the American Academy of Political and Social Science in 2020.
American Economic Association
In 2004, Nordhaus was designated a Distinguished Fellow of the American Economic Association (AEA), along with George P. Shultz and William A. Brock. The accompanying AEA statement referred to his "knack for asking large questions about the measurement of economic growth and well-being, and addressing them with simple but creative insights," among them, his pioneering work on the political business cycle, ways of using national income accounts data to devise economic measures reflecting better health, increases in leisure and life expectancy, and "constructing integrated economic and scientific models to determine the efficient path for coping with climate change". In 2013, Nordhaus became president-elect of the AEA, and served as the association's president between 2014 and 2015.
Nobel Memorial Prize in Economics
Nordhaus was awarded the Nobel Memorial Prize in Economic Sciences in 2018, which he shared with Paul Romer. In detailing its reasons for giving the prize to Nordhaus, the Royal Swedish Academy of Sciences specifically recognized his efforts to develop "an integrated assessment model, i.e. a quantitative model that describes the global interplay between the economy and the climate. His model integrates theories and empirical results from physics, chemistry and economics. Nordhaus' model is now widely spread and is used to simulate how the economy and the climate co-evolve."
Many of the news outlets that reported on Nordhaus's prize noted that he was in the advance wave of economists who embraced a carbon tax as a preferred method of carbon pricing. 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 minimal carbon taxes.
Evaluations
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." 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."
Critics of Nordhaus's DICE model focus on several aspects. One of the most important, incorporating political and moral philosophy, is the use of discounting, with an early study by William Cline. Another branch, represented by Robert Pindyck, holds that integrated assessment models cannot capture the complexity of the climate-economy nexus. Nicholas Stern argued that the damage function does not capture many of the most important risks to society. A particularly important critique, developed by Martin Weitzman, is that the economy-climate system may have "fat tails" and therefore inadequately deal with low probability, high consequence outcomes.
Post-Keynesian economist Steve Keen criticises the economics of climate change generally and the 2018 work by Nordhaus in particular:
"economists made their own predictions of damages, using three spurious methods: assuming that about 90% of GDP will be unaffected by climate change, because it happens indoors; using the relationship between temperature and GDP today as a proxy for the impact of global warming over time; and using surveys that diluted extreme warnings from scientists with optimistic expectations from economists."
When specifically speaking about Nordhaus, he says that "Nordhaus has misrepresented the scientific literature to justify the using a smooth function to describe the damage to GDP from climate change. Correcting for these errors makes it feasible that the economic damages from climate change are at least an order of magnitude worse than forecast by economists, and may be so great as to threaten the survival of human civilization."
See also
List of Jewish Nobel laureates
References
Further reading
External links
William Nordhaus (Yale Home Page)
The Question of Global Warming Nordhaus exchange with Freeman Dyson and others from The New York Review of Books
Energy: Friend or Enemy? October 27, 2012 in The New York Review of Books
including the Prize Lecture Climate Change: The Ultimate Challenge for Economics
Living people
1941 births
American Nobel laureates
American people of German-Jewish descent
21st-century American economists
Jewish American economists
Nobel laureates in Economics
Environmental economists
Climate economists
Energy economists
Economists from New Mexico
Yale University alumni
MIT School of Humanities, Arts, and Social Sciences alumni
Yale Sterling Professors
Fellows of the Econometric Society
Presidents of the American Economic Association
Fellows of the American Academy of Arts and Sciences
United States Council of Economic Advisers
Yale University faculty
Distinguished Fellows of the American Economic Association
Members of the Royal Swedish Academy of Engineering Sciences
Members of the United States National Academy of Sciences
People from Albuquerque, New Mexico
Fellows of Clare Hall, Cambridge
Alumni of Clare Hall, Cambridge
Members of Skull and Bones