The Use and Misuse of Models for Climate Policy

18 Pages Posted: 20 Apr 2015

See all articles by Robert S. Pindyck

Robert S. Pindyck

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Date Written: April 2015

Abstract

In recent articles, I have argued that integrated assessment models (IAMs) have flaws that make them close to useless as tools for policy analysis. IAM-based analyses of climate policy create a perception of knowledge and precision that is illusory, and can fool policy-makers into thinking that the forecasts the models generate have some kind of scientific legitimacy. But some have claimed that we need some kind of model, and that IAMs can be structured and used in ways that correct for their shortcomings. For example, it has been argued that although we know little or nothing about key relationships in the model, we can get around this problem by attaching probability distributions to various parameters and then simulating the model using Monte Carlo methods. I argue that this would buy us nothing, and that a simpler and more transparent approach to the design of climate change policy is preferable. I briefly outline what that approach would look like.

Suggested Citation

Pindyck, Robert S., The Use and Misuse of Models for Climate Policy (April 2015). NBER Working Paper No. w21097. Available at SSRN: https://ssrn.com/abstract=2596426

Robert S. Pindyck (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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HOME PAGE: http://web.mit.edu/rpindyck/www/

National Bureau of Economic Research (NBER)

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