The Lucas Critique and Climate Change

In Economics we have something called the Lucas Critique. Lucas’ observation was that people change their behavior depending on the policy environment. Its dangerous to assume because we see a correlation between high level variables (e.g. output and inflation), those relationship will hold when when we change the policy (e.g. increase inflation). His critique was basically a call for economist to think about the deep structure of the relationships between high level variables. For us economists, this meant we should look at people’s preferences and how people go about making decisions. (I know it sounds strange, but many macro economists didn’t consider these ‘micro foundations’ before Lucas.)

Now there is the Dyson Critique of climate models:

Concerning the climate models, I know enough of the details to be sure that they are unreliable. They are full of fudge factors that are fitted to the existing climate, so the models more or less agree with the observed data. But there is no reason to believe that the same fudge factors would give the right behavior in a world with different chemistry, for example in a world with increased CO2 in the atmosphere.

I don’t know anything about climate models, but it sounds like he’s making a Lucas-like critique of those models. Those models assume the correlation between CO2 and global warming (or other high level variables like cloud cover) will remain unchanged in the changing environment (e.g. higher CO2 levels). Without knowing the deep relationship between CO2 and these other climate variables it seems dangerous to try to predict their future relationships. He seems to be encouraging climate scientists, like Lucas encouraged economists, to understand the deep relationships between the variables they’re studying.

(h/t Newmark’s Door)

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