William Dawbney Nordhaus
May 31, 1941
|Education|| Yale University (B.A., M.A.)|
Massachusetts Institute of Technology (Ph.D.)
|Awards|| BBVA Foundation Frontiers of Knowledge Award (2017)|
Nobel Memorial Prize in Economic Sciences (2018)
|Thesis||A theory of endogenous technological change (1967)|
|Doctoral advisor||Robert Solow|
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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 one of the 2 recipients of the 2018 Nobel Memorial Prize in Economic Sciences.Nordhaus received the prize "for integrating climate change into long-run macroeconomic analysis".
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) immigrated from Paderborn in 1883 and was 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 1973, 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 Boston Federal Reserve Bank 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.
Nordhaus is the author or editor of over 20 books. One of his early works, he partnered with Paul Samuelson as a co-author for an introductory textbook entitled Economics. Nordhaus worked alongside Samuelson from the 12th edition until the 19th, starting in 1985.It was first published in 1948 and has appeared in nineteen different editions and seventeen different languages. It was known as a best-selling economics textbook for decades and is still extremely popular today. Economics was called a “canonical textbook”, and the development of mainstream economic thought has been traced by comparing the nineteen editions over the 1948–2010 period.
He 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 Economics. Another book, with Joseph Boyer, is Warming the World: Economic Models of Global Warming (2000), The Climate Casino: Risk, Uncertainty, and Economics for a Warming World.His most recent book is The Spirit of Green (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 (Index of Sustainable Economic Welfare) as the first attempt to develop environmental accounting.
Nordhaus is also known for his critique of current measures of national income. He wrote, "If we are to obtain accurate estimates of the growth of real incomes over the last century, we must somehow construct price 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, of Pony Express with facsimile machine, of carbon paper with photocopier, of dark and lonely nights with nights spent watching television, and of brain surgery with magnetic resonance imaging" (1997, 30).
Palda summarizes the importance of Nordhaus's insight as follows: "The practical lesson to be drawn from this fascinating study of lighting is that the way we measure the consumer 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 which welfare and other forms of aid should be increased. At present, such calculations tend to overestimate the cost 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 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.
A Question of Balance: Weighing the Options on Global Warming Policies ISBN 978-0300137484 was published by Yale University Press in 2008.
In Reflections on the Economics of Climate Change (1993), he states: "Mankind is playing dice with the natural environment through a multitude of interventions – injecting into the atmosphere trace gases like the greenhouse gases or ozone-depleting chemicals, engineering massive land-use changes such as deforestation, depleting multitudes of species in their natural habitats even while creating transgenic ones in the laboratory, and accumulating sufficient nuclear weapons to destroy human civilizations."Under the climate change models he has developed, in general those 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. 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:
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 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, 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 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.
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.
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.
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.
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.
Steve Keen, the heterodox economist, criticises the economics of climate change: "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."
James Tobin was an American economist who served on the Council of Economic Advisers and consulted with the Board of Governors of the Federal Reserve System, and taught at Harvard and Yale Universities. He developed the ideas of Keynesian economics, and advocated government intervention to stabilize output and avoid recessions. His academic work included pioneering contributions to the study of investment, monetary and fiscal policy and financial markets. He also proposed an econometric model for censored dependent variables, the well-known tobit model.
George Arthur Akerlof is an American economist who is a university professor at the McCourt School of Public Policy at Georgetown University and Koshland Professor of Economics Emeritus at the University of California, Berkeley. Akerlof was awarded 2001 Nobel Memorial Prize in Economic Sciences, jointly with Michael Spence and Joseph Stiglitz, "for their analyses of markets with asymmetric information."
Robert Merton Solow, GCIH is an American economist whose work on the theory of economic growth culminated in the exogenous growth model named after him. He is currently Emeritus Institute Professor of Economics at the Massachusetts Institute of Technology, where he has been a professor since 1949. He was awarded the John Bates Clark Medal in 1961, the Nobel Memorial Prize in Economic Sciences in 1987, and the Presidential Medal of Freedom in 2014. Four of his PhD students, George Akerlof, Joseph Stiglitz, Peter Diamond and William Nordhaus later received Nobel Memorial Prizes in Economic Sciences in their own right.
Paul Anthony Samuelson was an American economist, who was the first American to win the Nobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, the Swedish Royal Academies stated that he "has done more than any other contemporary economist to raise the level of scientific analysis in economic theory". Economic historian Randall E. Parker has called him the "Father of Modern Economics", and The New York Times considers him to be the "foremost academic economist of the 20th century".
Lawrence Robert Klein was an American economist. For his work in creating computer models to forecast economic trends in the field of econometrics in the Department of Economics at the University of Pennsylvania, he was awarded the Nobel Memorial Prize in Economic Sciences in 1980 specifically "for the creation of econometric models and their application to the analysis of economic fluctuations and economic policies." Due to his efforts, such models have become widespread among economists. Harvard University professor Martin Feldstein told the Wall Street Journal that Klein "was the first to create the statistical models that embodied Keynesian economics," tools still used by the Federal Reserve Bank and other central banks.
Ross McKitrick is a Canadian economist specializing in environmental economics and policy analysis. He is a professor of economics at the University of Guelph, and a senior fellow of the Fraser Institute.
Nicholas Herbert Stern, Baron Stern of Brentford, is a British economist, banker, and academic. He is the IG Patel Professor of Economics and Government and Chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics (LSE), and 2010 Professor of Collège de France. He was President of the British Academy from 2013 to 2017, and was elected Fellow of the Royal Society in 2014.
Paul Michael Romer is an American economist and policy entrepreneur who is a University Professor in Economics at New York University. Romer is best known as the former Chief Economist of the World Bank and for co-receiving the 2018 Nobel Memorial Prize in Economic Sciences for his work in endogenous growth theory. He also coined the term "mathiness," which he describes as misuse of mathematics in economic research.
The MIT Department of Economics is a department of the Massachusetts Institute of Technology in Cambridge, Massachusetts.
Economics is an introductory textbook by American economists Paul Samuelson and William Nordhaus. The textbook was first published in 1948, and has appeared in nineteen different editions, the most recent in 2009. It was the best selling economics textbook for many decades and still remains popular, selling over 300,000 copies of each edition from 1961 through 1976. The book has been translated into forty-one languages and in total has sold over four million copies.
The Stern Review on the Economics of Climate Change is a 700-page report released for the Government of the United Kingdom on 30 October 2006 by economist Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics (LSE) and also chair of the Centre for Climate Change Economics and Policy (CCCEP) at Leeds University and LSE. The report discusses the effect of global warming on the world economy. Although not the first economic report on climate change, it is significant as the largest and most widely known and discussed report of its kind.
Robert O. Mendelsohn is an American environmental economist. He is currently the Edwin Weyerhaeuser Davis Professor of the School of Forestry and Environmental Studies at Yale University, Professor of Economics in Economics Department at Yale University and Professor in the School of Management at Yale University. Mendelsohn is a major figure in the economics of global warming, being for example a contributor to the first Copenhagen Consensus report. Mendelsohn received a BA in economics from Harvard University in 1973 and obtained his Ph.D. in economics from Yale University in 1978.
Carbon pricing, also known as cap and trade (CAT) or emissions trading scheme (ETS), is a method for nations to reduce global warming. The cost is applied to greenhouse gas emissions in order to encourage polluters to reduce the combustion of coal, oil and gas – the main driver of climate change. The method is widely agreed and considered to be efficient. Carbon pricing seeks to address the economic problem that emissions of CO2 and other greenhouse gases (GHG) are a negative externality – a detrimental product that is not charged for by any market.
Stephen DeCanio is a Professor of economics, emeritus, at the University of California, Santa Barbara. His current research deals with the impact of artificial intelligence on society, the economy, and culture. His recent research has also addressed the consequences of computational limits for economics and social theory more generally. He has published books and articles in the fields of global environmental protection and energy economics, the theory of the firm, and economic history. He studied mathematics as an undergraduate at the University of California, Berkeley and received his Ph.D in economics from the Massachusetts Institute of Technology in 1972. After teaching at Tufts University (1970–72) and Yale University (1972-78), he joined the faculty at UCSB in 1978. From 1986 to '87 he was the Senior Staff Economist at the President's Council of Economic Advisors. He was also a member of the United Nations Environment Programme Economic Options Panel, which reviewed the economic aspects of the Montreal Protocol on Substances that Deplete the Ozone Layer.
Terry Barker is a British economist and former Director of the Cambridge Centre for Climate Change Mitigation Research (4CMR) part of the Department of Land Economy, University of Cambridge. He is also a member of the Tyndall Centre, the Chairman of Cambridge Econometrics, and chairman of the Cambridge Trust for New Thinking in Economics, which is a charitable organisation with a mission to promote new approaches to solving economic problems.
Sir Dieter Robin Helm is a British economist and academic.
Citizens' Climate Lobby (CCL) is an international grassroots environmental group that trains and supports volunteers to build relationships with their elected representatives in order to influence climate policy. The CCL is a registered 501(c)(4) with approximately $680,000 in revenue in the United States in 2018. Operating since 2007, the goal of CCL is to build political support across party lines to put a price on carbon, specifically a revenue-neutral carbon fee and dividend (CF&D) at the national level. CCL is supported by notable climate scientists James Hansen, Katharine Hayhoe, and Daniel Kammen. CCL's advisory board also includes former Secretary of State George P. Shultz, former US Representative Bob Inglis, actor Don Cheadle, and RESULTS founder Sam Daley-Harris.
The Dynamic Integrated Climate-Economy model, referred to as the DICE model or Dice model, is a neoclassical integrated assessment model developed by 2018 Nobel Laureate William Nordhaus that integrates in the neoclassical economics, carbon cycle, climate science, and estimated impacts allowing the weighing of subjectively guessed costs and subjectively guessed benefits of taking steps to slow climate change. Nordhaus also developed the RICE model, a variant of the DICE model that was updated and developed alongside the DICE model. Researchers who collaborated with Nordhaus to develop the model include David Popp, Zili Yang, and Joseph Boyer.
The Economists' Statement on Climate Change was published in 1997, prior to the Kyoto Protocol negotiated that same year, to promote market-based solutions to climate change. It was signed by more than 2,600 economists, including 19 Nobel Prize laureates, and remains the largest public statement in the history of the economics profession.
The Special Report on Global Warming of 1.5 °C (SR15) was published by the Intergovernmental Panel on Climate Change (IPCC) on 8 October 2018. The report, approved in Incheon, South Korea, includes over 6,000 scientific references, and was prepared by 91 authors from 40 countries. In December 2015, the 2015 United Nations Climate Change Conference called for the report. The report was delivered at the United Nations' 48th session of the IPCC to "deliver the authoritative, scientific guide for governments" to deal with climate change.
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 . ...