Discount Rates Hole

In which Management moves a rather contentious set of comments about the possibility of negative interest rates to it's own hole. Now one has to carefully distinguish between such things as the cost of funds, the discount rate and the social discount rate, something that the bunnies have not been very careful at, but this is not the first time that such a discussion has occurred, for example this post and the comments (read the post AND at least the first comment). Positive discount rates ALWAYS value the present over the future and are an assumption.

There have been long periods when global growth decreased although not recently, for example, between 1100 and 1300, and others where it remained roughly constant, again, for example between 200 BC and 400 AD. The triple threats of nuclear war, species extinction and climate change pose such a threat, and IEHO if we do not meet those challenges today it will be grim.

And so to the tape
--------------------------

John Mashey said...

I am impressed to hear that the GDP/capita in developed world will be $400K ... those people will be *rich*.

[Ayres & Warr still make me nervous that the ~3% discount rates come from a century of cheap fossil fuels, and while I've asked often, no one has yet to give me a a clear reason why the discount rate should overall be positive for 2100. it would be awfully nice of the part of economics that seems to want to be physics had cosnervations laws and similar things to help reality checks.]

18/1/11 12:04 AM

---------------------

Anonymous says

Marlowe J asks " more stuff on climate policy/economics please.
Glad to Marlowe

Boy oh Boy, is this a beehive of stupidity or what.

John Mashey says:

[Ayres & Warr still make me nervous that the ~3% discount rates come from a century of cheap fossil fuels, and while I've asked often, no one has yet to give me a a clear reason why the discount rate should overall be positive for 2100. it would be awfully nice of the part of economics that seems to want to be physics had cosnervations laws and similar things to help reality checks.]

I mean this in the nicest possible way. I can’t believe after reading the Mash’s comment how he could have possibly been senior technology scientist at a technology company. But I remind myself that it went into chap 11 and feel more at peace.

Mash, you total economics ignoramus, what the hell has discount rate have to do with (your words) “heap fossil fuels”? What the damn hell is going though you mind when you said:

“Ayres & Warr still make me nervous that the ~3% discount rates come from a century of cheap fossil fuels”

For crying out loud.

He then asks possibly the stupidest rhetorical question I have ever seen on a blog let alone a blog post trying to attack an economist. He asks himself why should a discount rate that should logically give value to present goods over future ones be positive. The Mash reasons it should be negative! Negative! FFS

This can only leave me with one option, which is to request a loan from the Mash.

Mash, please give me $100,000 today only on condition you pay me 3% a year for 100 years. I take it that’s a deal.

The Mash then has the audacity to suggest reality check.

I can’t believe Eli has allowed that comment to go through without deletion or perhaps even banning him for not being ummmmm, up to scratch. At the very least Eli should ask the Mash to lift his game/ or perhaps we forgive him for being a Californian. 18/1/11 7:22 AM

-------------------------

J Bowers said...

Anonymous -- "How can a case be made to take from the poor (present generation) to give to the rich (future generations), "

Ask any parent or grandparent.

-----------------------

Anonymous said...
Bowers:

Your little comment is emotive and doesn't make any sense as to why we should take from the poor to give to the rich.
In fact, if you really thought about your comment some more instead of emotive babble you would realize that the actors in your example are the richer (parents and grand parents) giving to the poorer (the kids).It in no way negates the point I made and in fact supports it.

18/1/11 9:01 AM

---------------------------

Martin Vermeer said...

J Bowers, Anonymous: a better example would be a soldier dying in combat, or a dissident rotting in jail, so his children may be free.

Sometimes the bell just tolls.

---------------------------

Much more follows, some of it, not nice

----------------------------------
John Mashey said...

Please, somebody convince me that the discount rate to 2100AD is positive....

And will the various anonymice prove they can read and follow Eli's clear admonition:

"Dear Anonymous,
Some of the regulars here are having trouble telling the anonymice apart. Please add some distinguishing name to your comment such as Mickey, Minnie, Mighty, or Fred."

Please pick a pseudonym and at least stick with it for a discussion, otherwise my motto is:
IUOUI = Ignore Unsupported Opinions of Unidentifiable Individuals

Perhaps Eli can send more anonymous posts to the Rabett Hole, which might be considered the 11th circle...

18/1/11 5:07 PM

-----------------------------

Anonymous said...

"Please, somebody convince me that the discount rate to 2100AD is positive...."

How can we convince you the earth is flat, Mash.

Here, this may convince you.

Lend me 1,000,000 and pay me 3% for doing so. If you don't agree to the deal which I'm happy to offer security double the value you're simply a bullshit artist.

When do we sign up Mash?

18/1/11 5:16 PM

----------------------

Anonymous said...

John Mashey, I'm deadly freaking serious, man.

If you think we should use a negative discount rate I am prepared to borrow any amount of money you can offer me and I will give you double security. I'll even throw in a small NYC apartment as part of the security to sweeten it up. (Not in Crooklyn of course).

And you pay me 3% for the privilege.

Best anon.

18/1/11 5:52 PM

----------------------------

Anonymous said...

This is a truly bizarre debate...

If people believe in negative natural interest rates, they are beyond hope and in turn anti economics and anti conservationist – they are intellectual dropkicks. They are discounting time value of money entirely. In fact, the message is to consume as much as humanly possibly right now, and not give two craps about the environment.

18/1/11 6:35 PM

-----------------------

EliRabett said...

Anon, yes, negative discount and interest rates exist. On the monetary side, Switzerland has on occasion offered negative interest rates to discourage foreign investment in SF. Folks bought anyhow because of the perceived safety of the investment.

Real interest rates can easily be negative if inflation is higher than the interest rate.

In both cases it ain't pretty, but it does happen.

A discount rate reflecting economic growth, assumes that the economy grows. The proper discount rate for 1928 - 1935 would be what? Berry, berry negative. Worse even for the period after Rome fell. The argument for a positive rate is that historically over the past century and a half (with brief periods of contraction) the global economy has grown, but there are sadly exceptions such as Somalia, where a negative discount rate would apply.

So no Virginia, there is no guarantee. Social interest rates are a whole other entire ball of wax.

18/1/11 8:40 PM

-----------------------------

Anonymous said...

"Anon, yes, negative discount and interest rates exist. On the monetary side, Switzerland has on occasion offered negative interest rates to discourage foreign investment in SF. Folks bought anyhow because of the perceived safety of the investment. "

It was a technical abberation caused by the structure of Bretton Woods when money was pouring into Switzerland across the border. The Swiss were using that regulation to dissuade this form of portfolio capital flows. It wasn't market driven, as the exchange rate was fixed and was also a regulatory imposition.

Finally Eli, you are basically referring to short term interests and certainly there was never any attempt to change the 100 year time preference e en in switizerland, as you're implying.

Yes, there there negative real rates that show up at times and there were also negative long bond rates when interest rates and reserve requirements were controlled by the Fed under Regulation Q, but that was placed back in the draw in 1978(ish) when the Fed abolished interest rate controls.

"....but there are sadly exceptions such as Somalia, where a negative discount rate would apply".

Not true.

You are actually suggesting that you could find someone that would happily give you local currency as a loan and would also happily pay you interest to get that money back in the future.

I challenge you to offer up proof. 18/1/11 9:21 PM

----------------------

Eli will interject here. Anon is confusing the interest rate with the discount rate especially the discount rate appropriate to intergenerational transfers (see link at the top of this post). It is perfectly rational to value the future more than the present under some circumstances, especially if one values those who might follow us. Moreover, as Eli has shown, there are cases where both negative interest rates (when you are interested in preserving disappearing value)

----------------

Anonymous said...

There is no such thing as negative natural interest rates. The payoff decision criteria for lenders is not symmetrical. Furthermore, in cases of recession where there isn't a liquidity crisis, financial institutions still demand positive real returns, as do less senior creditors, who demand a higher positive rate, with or without recession.

"Social" discount rates ought to reflect the market real rate of capital costs. Like actual discount rates. They are meant to represent the value of capital investment forgone. Otherwise they represent nothing and you also begin to engage in double counting.

It is simply amazing we have so called conservationists believing in a price signal which would tell us all to consume everything now and ignore the consequences.

"The argument for a positive rate is that historically over the past century and a half (with brief periods of contraction) the global economy has grown..."

No. That is just part of it. Furthermore, the current century should have a higher growth rate than the 1900s, as the trend and antecedents suggest.

18/1/11 9:54 PM

---------------------------

Anonymous said...

There is no such thing as negative natural interest rates. The payoff decision criteria for lenders is not symmetrical. Furthermore, in cases of recession where there isn't a liquidity crisis, financial institutions still demand positive real returns, as do less senior creditors, who demand a higher positive rate, with or without recession.

"Social" discount rates ought to reflect the market real rate of capital costs. Like actual discount rates. They are meant to represent the value of capital investment forgone. Otherwise they represent nothing and you also begin to engage in double counting.

It is simply amazing we have so called conservationists believing in a price signal which would tell us all to consume everything now and ignore the consequences.

"The argument for a positive rate is that historically over the past century and a half (with brief periods of contraction) the global economy has grown..."

No. That is just part of it. Furthermore, the current century should have a higher growth rate than the 1900s, as the trend and antecedents suggest.

18/1/11 9:54 PM

------------------------

Jakerman said...

Shorter anon (who is now repeating Tol worshiping claims made by Fred Knell):

"Its is good economics to lose 20% of GDP in order to preserve 1% of GDP."

Try harder Fred, you might convince yourself.

18/1/11 10:46 PM

-----------------------------

Martin Vermeer said...

Stern was more of less suggesting we use 1% of
> the growth rate to mitigate. ... as the growth
> rate trajectory falls to 3.5% growth rate

Nope. Not "more or less", not at all. Read the Executive Summary page xiii.

Resource cost estimates suggest that an upper bound for the expected annual cost of emissions reductions consistent with a trajectory leading to stabilisation at 550ppm CO2e is likely to be around 1% of GDP by 2050.

There is no reason this 1% should be taken off the growth rate. That is your choice. It could be taken off consumption instead, in which case by 2100, the available GGDP would be $3,152 trillion - 1% = $3,120.5 trillion, well over the alternative of $2,522 trillion.

I hope this is unsophisticated enough ;-)

18/1/11 11:23 PM

------------------

Anonymous said...

Vermeer Says:
You can take 1% off consumption LOl.

How do exactly do that when consumption is 60% off GDP. How do you mange removing 1% a year off the rate of consumption without lowering living standards? And who gets it?

Your comment isn't unsophisticated it's dumb. It's about as stupid as Mashey suggesting we apply negative time preference rates.

18/1/11 11:36 PM

-------------------------------

Martin Vermeer said...

I've see John Mashey do this before, and it's fun to watch. Plant some simple idea, lean back, and watch crazy creeping out of their nooks...

Negative GDP growth rates produce negative discount rates naturally; any "economist" not grasping this should go demand their tuition fees back. A simple example is the following.

We are writing the year 2060AD, the economy is stagnating, teetering on the brink of collapse. Inflation is running 10% per annum, and no productive investments can be found promising even as much as 1%.

One John Mashey Jr. has $1000,000 that he doesn't know what to do with. Out of the blue comes one Anomymous Jr, offering to borrow the money and pay 1% per annum for doing so, with impeccable securities. Mashey Jr. of course takes him up on the offer -- 1% isn't great, but it beats keeping it under your mattress.

Now the point is, that the real interest rate that Mashey Jr. sees, is -9%. This is the proper discount rate to consider. Simple!

18/1/11 11:42 PM

------------------------
Anonymous said...

Martin V Says:

"There is no reason this 1% should be taken off the growth rate. That is your choice. It could be taken off consumption instead, in which case by 2100, the available GGDP would be $3,152 trillion - 1% = $3,120.5 trillion, well over the alternative of $2,522 trillion."

The 1% GGDP is the cost of mitigation. That’s a reasonable estimate how much big government directed mitigation would cost as a baseline figure that can be expressed any way you want but it has a dollar amount and the accepted norm on how to express it is over GGDP.

No mater how this is spun and dried the cost of mitigation is 1% of GGDP. If you wish to base the measure on Global consumption rates the cost will simply be a function of the consumption component of GGDP. There’s no getting around it, Hercules.

---------------------------

Martin Vermeer said...

> How do exactly do that when consumption
> is 60% off GDP.

Well, you take 1% off so it becomes 59% of GDP.

> How do you mange removing 1% a year off the rate of consumption

Not 1% a year. 1% period, every year anew, off that year's consumption -- there is no such thing as a "rate of consumption". Read the fscking report... perhaps after brushing up on your English reading comprehension.

18/1/11 11:51 PM

--------------------------
Martin Vermeer said...

There’s no getting around it, Hercules.

Sigh, someone else with reading comprehension issues. Use the formula Luke: the 1% is 1% of GGDP. Taken off the consumption part of GGDP. Rather than eating up the seed grains, so to speak, which most farmers will tell you is not a good idea.

18/1/11 11:58 PM

-------------------
Anonymous said...

"I've see John Mashey do this before, and it's fun to watch. Plant some simple idea, lean back, and watch crazy creeping out of their nooks..."

If it’s as stupid as the idea he would lend me money and pay interest to the borrower. If he really did that people would end up laughing at the economic illiterate. No wonder you like his scrawls.

"“Negative GDP growth rates produce negative discount rates naturally; any "economist" not grasping this should go demand their tuition fees back. A simple example is the following.

We are writing the year 2060AD, the economy is stagnating, teetering on the brink of collapse. Inflation is running 10% per annum, and no productive investments can be found promising even as much as 1%.”"

This isn’t time preference, you moron. You’re discussing economic events.

"One John Mashey Jr. has $1000,000 that he doesn't know what to do with. Out of the blue comes one Anomymous Jr, offering to borrow the money and pay 1% per annum for doing so, with impeccable securities. Mashey Jr. of course takes him up on the offer -- 1% isn't great, but it beats keeping it under your mattress."

No, that’s not what the Mash has said. The Mashster suggested negative time preference. In other words he would lend money now and pay the borrower for the privilege. If you think that is a good idea, you’re stupider than he is.

"Now the point is, that the real interest rate that Mashey Jr. sees, is -9%. This is the proper discount rate to consider. Simple!"

What’s is simple is seeing a liberal arts grad from a so so college pretend he understands econometrics and in your case even basic economics for that matter.

19/1/11 12:15 AM

-----------------------------------
John Mashey said...

Martin: yes, it is simple, and having talked about the effect of energy on GDP/capita with Ayres (a very sharp guy) over dinner, I get nervous. By coincidence, here's an Economics blog post from a few days ago, on Oil shocks and economic recessions. As Hamilton (UCSD Econ Prof) writes:

"Every recession (with one exception) was preceded by an increase in oil prices, and every oil market disruption (with one exception) was followed by an economic recession."

Anon is very much in the style of Fred Knell, as in 19/1/11 12:32 AM

----------------------------------

Richard Tol said...

@Martin, Anonymous
Stern's estimate of the cost of emission reduction should be read as follows: GDP in 2050 with climate policy is 99% of GDP in 2050 without climate policy.

Roughly, that means that both consumption and investment are 1% lower. It does NOT mean that the growth rate of the economy is 1 percent-point lower.

19/1/11 12:19 AM

------------------------------------
Anonymous said...

If the estimate of large scale mitigate cost is 1% a year of GGDP then it doesn't really matter where that 1% is lifted from if it's also compounding at the annual sum of compounding GDP. It changes nothing.

As far as Stern explanation goes.. he's playing semantics. 1% of consumption and investment is 1% of GDP. How he can pretend to remove

government + (exports- imports) is rank nonsense. Who is Stern trying to kid as you can't remove mitigation costs from G or Ex - Im in a full blown mitigation environment.

Definition:

GDP = consumption +investment + govt (ex- imp).

19/1/11 12:37 AM

------------------------

Anonymous said...

Richard:

If the estimate of large scale mitigate cost is 1% a year of GGDP then it doesn't really matter where that 1% is lifted from if it's also compounding at the annual sum of compounding GDP. It changes nothing.

As far as Stern explanation goes.. he's playing semantics. 1% of consumption and investment is 1% of GDP. How he can pretend to remove

government + (exports- imports) is rank nonsense. Who is Stern trying to kid as you can't remove mitigation costs from G or Ex - Im in a full blown mitigation environment.

Definition:

GDP = consumption +investment + govt (ex- imp).

19/1/11 12:37 AM

-------------------------
Jakerman said...

Anon (aka Fred Knell Or Frustrated potty mouth):

Let me repeat using Tol's terms (with slight improvment):

Sterns 2006 finding: GDP in 2050 with climate policy is 99% of GDP in 2050 without climate change.

And GDP in 2050 without climate policy is 80-95% of GDP in 2050 without climate change.

Sorry that keep getting things wrong Fred. I can see where your frustration arises.

19/1/11 1:00 AM

--------------------------

Jakerman said...

BTW Fred, it was sweet of you to give us this line:

""I'm a ignorant dick".I can't try harder with you, jakerman, as you're too stupid to understand."

But even sweeter that you did so just to get this smack down from your idol:

"It does NOT mean that the growth rate of the economy is 1 percent-point lower."

19/1/11 1:15 AM

----------------------------
Anonymous said...

Jerkerman:

I'm not Fred, so stop it with the blind punches. If you don't like him, Fred has to be a good guy.

Do you even understand what you're saying? I don't think so.

Okay, His Lordship (stern) says:

1. There is minimal climate change damage in 2050. 1%.

2. The bulk of the damage will be felt beyond that and by 2050 the world will experience AGW damage of around 15 to 20% of GGDP.

3. Other current mitigation estimates are 1% of GGDP from now on.

I used roughly these parameters in my earlier comment, so what's your point? Do you think that by wasting pixels it will somehow raise my estimates of your comments. No they won't primarily because you're a fool, and ELI aside, this thread has attracted a large number of economic illiterates and fools.

I blame it on the liberal arts colleges.

Are you Californian too, because Mash is.

19/1/11 1:23 AM

--------------------------

Anonymous said...

"It does NOT mean that the growth rate of the economy is 1 percent-point lower.""

No, Tol doesn't because he's being professional and exacting with what His Lordhship (Stern) said.

But if you see above I understood exactly what Tol is doing/saying and I explain it without the niceties, as I don't believe His Lordship deserves any.

Anyone who says (like his Lordship) that there will be AGW damage/mitigation effects on consumption and Investment which make up the bulk of GDP but avoids the effects on G + (ex -Im) is a bullshit artist.

19/1/11 1:31 AM

---------------------------

Jakerman said...

Anon (aka Fred Knell) I can see why you'd want to distance your Fred persona from your comments in this thread, and the last thing I'm goinng to do is take your word for it. Compare your claims and language and Tol worship in this thread to yours over at Deltoid.

While it matters little little to me I think you are Fred Knell.

Fred continues:

"I used roughly these parameters in my earlier comment, so what's your point?"

That you got it wrong, when you based your argument on this false premise:

"Stern was more of [sic] less suggesting we use 1% of the growth rate to mitigate." And then you took this further to make more false claims. And you made your error delicious by telling those who corrected you that they were "stupid" and "ignorant dicks".

19/1/11 2:10 AM

----------------------------------

Tim Worstall said...

Just to be annoying: say that mitigation will indeed cost 1% of GDP each and every year.

In the UK that's £14 billion (1% of the £1,400 billion economy).

We already pay £14 billion (and a lot more in fact) in mitigation, higher energy prices, pigou taxes etc.

Thus the UK has solved climate change.

Or, as an alternative, Stern's insistence that mitigation will only cost 1% of GDP per annum is incorrect.

And here's the problem: those arguing that the UK must do much more are, by so arguing, insisting that Stern's cost estimates are wrong.

19/1/11 3:49 AM

------------------------------------

Martin Vermeer said...

Roughly, that means that both consumption and investment are 1% lower.

Richard, indeed. And doing the sums for that, it means that the rate of GGDP growth will also be 1% lower: 0.99*4.5 = 4.455% per annum. And GGDP will be

60 trillion * (1.04455)^90 = 3032 trillion

instead of 3152 trillion. A 4% shortfall.

19/1/11 4:01 AM

----------------------------

guthrie said...

No, Neil Craig always uses his own name, and uses different words.

There seems to be some problem here - Tim is saying we're already paying 14 billion cost for AGW mitigation, whereas I was under the impression mitigation was a matter of spending that 14 billion on a new energy production system, better housing, sea walls and suchlike.

19/1/11 4:06 AM

----------------------

Jakerman said...

Tim writes;
"Thus the UK has solved climate change."

Slightly premature Tim. You need to keep mitigating, its not even 2050 yet.

Also, Sterns 2006 figures were pre AR4 and dependent on strong early global action. Although the UK rolled up its sleeves working towards pulling its weight, laggards like Australia and USA etc dragged the chain.

Strong early global action described by Stern in 2006 is not looking likely for a few years. In 2008 (post AR4) Stern recognized higher rate of emissions and up graded the costs of mitigation to 2% of GDP, but also recognized the higher risks associate with our higher emissions rate.

19/1/11 4:19 AM

---------------------------

Anonymous said...

Martin V:

You seem to have a serious problem with rudimentary math.

The expression of 1% of GDP is just that it's an expression or a short-handed way of saying it will cost $6 trillion from a global economy that produces $60 trillion of GDP.

So each year the economy grows either 3.5% of 4.5% both those sums operate off the new compounded base, so it doesn't matter if it is expressed at a reduction off the growth rate, the consumption rate or the cost of beer ratio. What matters is the amount it represents.

Do you understand that now, you ignoramus?

There's nothing worse than liberal arts majors skulking around trying to sound all knowledgeable about these things except IT majors. Stick to the Iliad and let the grown ups speak.

19/1/11 4:23 AM

-----------------------------

a_ray_in_dilbert_space said...

Wow! Troll cleanup, aisle 1. All I know is that anyone who can say, "Ecology is for an innumerate pretending they are doing science when it's nothing of the sort these days," is an ignorant ass of monumental proportions. Ecology is one of the toughest of the sciences. I've been a physicist for 30 years. I'm no lightweight when it comes to bringing order to complicated studies. And yet I am astounded at the way ecologists manage to make sense out of their discipline. Sure there are bad ecological studies, but hey, G&T got published, too! There is a lot of very good work being done.

Our troll has contributed jack so far. He's given no evidence of being numerate himself, and his ejaculations are unworthy of any serious debate.

Back on topic. How can you do a study of mitigation before you have managed to bound the risk?

19/1/11 6:04 AM

----------------------------------

Anonymous said...

Dilbert:

If you think ecology hasn't been hijacked and is now a course in extremist environmental propaganda then it would lead me to think you're a pretty miserable physicist because you know or understand jack shit.

"How can you do a study of mitigation before you have managed to bound the risk?"

Easy. For a physicist to ask that question astonishes me.

We take an average of predictions of people in that specific field and then try to work for there with a cool headed approach (not like Stern who also took the effects of climate change on gender inequality into account). Pleazzzee.

Reasonable estimates of heavy handed top-down mitigation are around 1% of GGDP (and even that would be an under estimate as it wouldn't be taking into account the graft, corruption and rent seeking that would be going on like we've found in Europe since they introduced their abortion of a cap and trade.

My personal estimate? 2% of GDP for 100 years of growth getting hidden in a much lower growth trajectory.

19/1/11 6:19 AM

--------------------------

a_ray_in_dilbert_space said...

On discount rates, let us amend the proposed deal. You can borrow up to $100 for any amount of time and will be paid 3% per year. Unfortunately, we will have to drop you into an airtight tank and the money you are borrowing is the money that would have gone for oxygen for the tank and the price of oxygen goes up by the second. We will be happy to buy the oxygen as soon as you pay us back the money and throw in however much additional we must pay for oxygen. If you survive, we'll be happy to refund the amount you've earned in interest. We look forward to your reply.

19/1/11 6:22 AM

------------------------------

a_ray_in_dilbert_space said...

Anonymous, At the risk of stating the obvious, if you have not bounded risk, then how do you know that the money you spend to mitigate risk will not be wiped out by the unbounded risk you haven't bothered to consider. This is absolutely basic. Anyone who has ever worked on mission assurance or even properly considered an investment portfolio ought to know this.

19/1/11 6:26 AM

-------------------------------

Anonymous said...

Dilbert:

You astonish me. You boast about your qualifications as though physics is supposed to impress me to no end (It doesn't really). You now try and beef up Mash's economic illiteracy by posting gibberish on the site in troll like way.

The Mash said that he would like to see a negative time preference being used for mitigation. If the Mash prefers negative time preference I am happy to take a loan of any amount and I will offer him 100% security while he pays me 3% interest each year.

You don't even seem to understand the argument yet you're asking for people to be thrown off the thread? You're a clown.

19/1/11 6:32 AM

-------------------------------
Anonymous said...

“if you have not bounded risk, then how do you know that the money you spend to mitigate risk will not be wiped out by the unbounded risk you haven't bothered to consider.”

You can’t know, as we’ve never had any experience in assessing this form of risk before. Therefore we can only work with estimates of risk and find where the mean is on the curve and account for size of variance.

"This is absolutely basic".

Well actually it's not.

"Anyone who has ever worked on mission assurance or even properly considered an investment portfolio ought to know this".

Not true. There are volatility calculations one can perform on a portfolio and VAR. But you cannot insure for black swan events or can only do so by taking off risk from the portfolio. In terms mitigation that would basically mean de-industrializing.

Again, you astonish me with your last comment.

19/1/11 6:41 AM

---------------------------

a_ray_in_dilbert_space said...

Anonym-Ass,
OK, we'll put you down for an "utterly clueless" when it comes to risk mitigation. If you care to learn, here is the procedure you go through for any risk mitigation:

1)Understand the risk
2)Bound the risk
3)Mitigate the risk

Without a bound on the risk, it is impossible to say whether 1)you are overpaying to mitigate the risk or 2)any amount you invest to mitigate risk will be wiped out when unanticipated risk swamps your investment.

This is precisely what happens in an insurance company when they do not take into account the thick tails of the risk in coverage or an investment. Perhaps you could tell us exactly what portion of it you don't understand.

19/1/11 6:42 AM

----------------------------

Anonymous said...

"First, I think I've been pretty substantive and on topic throughout the discussion. I certainly think it is a reasonable to question how you can discuss mitigation before you've bounded risk even for the known uncertainties (and Tol has not)."

I nicely explained to you before that the only thing one can do with this is to set up a risk table supported by the risks in temps rise (scientists claims and therefore deriving the mean).

We have no real history of being able to make any other assessment of the risk, as there's been no previous experience. This is why it is different to insurance risk, as firms there are able to interpolate some historical data in what they insure.

You figure out the cost of mitigation up the prob curve and determine optimum.

At this stage if you look up at my claim earlier there is no case for top heavy mitigation efforts as the cost does not warrant a wealth transfer.

"And John's question is quite relevant. If climate change decreases ROI in the future, then the discount rate could well be negative--that is money spent now could significantly increase return down the road."

You're an ass. Time preference cannot be negative.

"Put another way: Would the discount rate for strengthening levies in New Orleans in 2000 have been positive or negative?"

There would never have been a discount rate figured out for such a thing by itself as it would form part of something else.. What an economist would do is prepare an cost benefit analysis while a discount rate would have have a part of the overall study. Time preference would have been positive.

You really don't understand this stuff, do you?

19/1/11 9:07 AM

--------------------------------------

John Mashey said...

a_ray_in_dilbert_space said...

And John's question is quite relevant. If climate change decreases ROI in the future, then the discount rate could well be negative--that is money spent now could significantly increase return down the road.

Actually, that wasn't my argument. My argument is that GDP/capita is fairly strongly related to energy*efficiency/capita (at least up to a point), and that the general idea that people will be 14X richer in 2100AD might be in jeopardy given Peak Oil+Gas.


Put another way, fossil = energy capital; it might be good to ivnest more of it into asserts that produce energy income, for when the capital is much less. Silicon Valley companies usually learn that if you have a a hot product, you'd better be investing some ofthe profits into R&D for the next one, rather than just partying.

19/1/11 9:20 AM

---------------------------

Anonymous said...

"And John's question is quite relevant. If climate change decreases ROI in the future, then the discount rate could well be negative--that is money spent now could significantly increase return down the road."

Jeez lord.

Time preference would NOT be negative in such an example. it would look like a firms cap ex. They are cap spending, expecting capture higher future returns than what is available. They would apply a positive discount rate, not negative.

You people need to understand the basics.

Have to go, enjoy yourselves no doubt at my expense and I will return later this afternoon to explain exactly what a firm would do and correct the "stupidities" that would no doubt show up.

19/1/11 9:27 AM

-----------------------------------

a_ray_in_dilbert_space said...

OK, I can see we have to go back to really basic ideas for our anonymous clownshoe.

OK, consider two possible scenarios. 1)Money invested now in mitigation cannot be invested in other profitable activity. This situation yields a positive discount rate. However, it presumes that there are other investments that will yield a profit. 2)If we do not invest in mitigation now, we damage the economy to the extent that positive ROI is not possible. In this case, the discount rate is negative. If we do not mitigate,all future investments yield lower returns. That really isn't so hard, is it?

The latter situation is quite possible in the case of climate change. Why? BECAUSE YOU HAVEN'T BOUNDED THE FRICKIN RISK!

Look, Clownshoe, I would consider a scenario in which 99% of species on the planet die to be one in which economic opportunities are seriously degraded. Richard, by his own admission, cannot rule that out.

We have been arguing about settled science for 20 years. We should have done something 20 years ago, and would have except for assclowns like you.

19/1/11 9:29 AM

---------------------------------

this appears to have run it's course

The Climate is Infernal

Somebunny, perhaps to be named later, dropped this in the mailbox at Rabett Labs. . .

Richard Tol,

Administrative update: In its wisdoom Blogger has instituted a spam filter into which comments appear to go for irregular reasons. Eli is now aware of this and will patrol, esp if something goes missing. These have now been restored as best as possible. Most were from this thread, but there were some others, so if your words of wisdom were eaten, they have probably been regurgitated (Eli hopes). That is all, but apologies for the interruption of services.


The recent discussions here, there and pretty much everywhere have been pushing on Richard Tol to defend his FUND model. In particular, on Deltoid, Bernard J and Jeff Harvey have been asking, ever so politely that Richard discuss the value of biodiversity in his model. Richard has put on the full court Pielke, telling everyone to go read his many papers.

A description of the model, the assumptions, and the code can be found at http://www.fund-model.org/ There is also a list of papers there, and another list at my home page (just click on my name).

I'm perfectly happy to discuss things point by point, initiated by a blog post that sets out the issue.

Maybe Tim will oblige.

Eli, well Eli is perfectly happy to accept Richard's invitation on their behalf and, know what bunnies, Bernard J was right

Richard Tol:

@Bernard There is no point in explaining and discussing a hugely complex issues [sic] in comments on a blog.

Actually, I would think that a scientifically-oriented blog such as Deltoid would be the perfect medium in which to succinctly summarise and then to discuss the "hugely complex issues" underpinning your models' assumptions about the impacts of climate change.

All the more so if your assumptions are ecologically inadequate, because it is quite possible that your target audience in the journals where you publish could well miss the fact that you have over-simplified your modeling to the point of uselessness. It is in exactly a forum such as this where you might have a mix of expertise that can rapidly identify any critically important failings of your assumptions.

Rabett Run's motto is RTFR, so Eli hied hisself over to the FUND web page and went and downloaded the description of FUND 3.5. The description of how biodiversity is handled, is quite short, about a page

5.6. Ecosystems

Tol (2002a) assesses the impact of climate change on ecosystems, biodiversity, species, landscape etcetera based on the "warm-glow" effect. Essentially, the value, which people are assumed to place on such impacts, are independent of any real change in ecosystems, of the location and time of the presumed change, etcetera – although the probability of detection of impacts by the ―general public is increasing in the rate of warming. This value is specified as

This can be divided into four parts. See below for more details. α is roughly the cost per person, where P is the number of people in a region r, at time t. The next term is a ratio of incomes, defined below. For an average current first world income of $30K, this is 0.5, but the majic of compound interest makes incomes grow so that in 2100 for the developed world it will be pretty close to unity. Since what happens to the developed world drives economic forecasts, this term too is not controlling, however, it is substantially less for the developed world, which raises ethical, but not economic issues.

The next ratio is essentially unity for Tol's choice of τ=0.025 K given any reasonable choice of the change in global temperature, and can be neglected. The last term is where the pea comes out of the shell. For the cost of biodiversity loss to exceed $50 per person, the ratio of the number of current species before 2000 to the number after is controlling.

where

• E denotes the value of the loss of ecosystems (in 1995 US dollar) at time t in region r;
• t denotes time;
• r denotes region;
• y denotes per capita income (in 1995 dollar per person per year) at time t in region r;
• P denotes population size (in millions) at time t in region r;
• ΔT denotes the change in temperature (in degree Celsius);
• B is the number of species, which makes that the value increases as the number of species falls – using Weitzman’s (1998) ranking criterion and Weitzman’s (1992, 1993) biodiversity index, the scarcity value of biodiversity is inversely proportional to the number of species;
• α=50 (0-100, >0) is a parameter such that the value equals $50 per person if per capita income equals the OECD average in 1990 (Pearce and Moran, 1994);
• y^b = is a parameter; y^b = $30,000, with a standard deviation of $10,000; it is normally distributed, but knotted at zero.
• τ=0.025ºC is a parameter;
• σ=0.05 (triangular distribution,>0,&lgt;1)
• B₀=14,000,000 is a parameter.

Stare at this for a while and you quickly convince yourself term that what really drives the cost is the last term. Eli built a table to show this, using median incomes of $30,000 for developed countries, $5,000 for developing countries middling China and India and $1,000 for underdeveloped countries. Eli used a 3% growth rate, and several values for the global temperature change.

	Year	Yt,r	[Yt,r/Yr]	ΔT	[ΔT/τ]
			(1+[Yt,r/Yr])		(1+ΔT/τ)
Developed	2010	$30,000	0.50	0.1	0.800
Developing	2010	$5,000	0.14	0.2	0.889
Undeveloped	2010	$1,000	0.03	0.8	0.970
Developed	2100	$416,518.46	0.93	1.0	0.976
Developing	2100	$69,419.74	0.70	2.0	0.988
Undeveloped	2100	$13,883.95	0.32	3.0	0.992

For undeveloped countries the first ratio goes from 0.03 in 2010 to .32 in 2100 with a 3% growth rate. Of course, this means that for the undeveloped countries, Tol assumes, and his choice of parameters ARE assumptions, a current biodiversity cost of $1.50, but it is in precisely those regions where biodiversity destruction is hitting hardest today. Ethics anyone? This ain't ethics, it's economics. Yet, let us pass quickly from there to a consideration of the fun time guesstimates, that ratio of the current number of species Bo, to the number at time t, B_t. That's where Richard pulls a Lubos. Tol defines B_t

where

• ρ = 0.003 (0.001-0.005, >0.0) is a parameter;
• γ = 0.001 (0.0-0.002, >0.0) is a parameter; and

These parameters are expert guesses. The number of species is assumed to be constant until the year 2000 at 14,000,000 species.

Some, not Eli, he hastens to add, might think this somewhat wrong. Others might think of it as insane. The numerical effect is to limit the cost of biodiversity loss per person at most to 100 ασ, or in dollars, 100 x $50 x 0.05, a maximum of $250. If you use Tol's parameters, you reach this wall in about 40 years, at which point 99% of the species on earth have disappeared in the great FUND die off. Perhaps this module of the FUND model needs, dare Eli say it, a bit more work.

UPDATE: Below in the comments, Richard Tol asserts:

"$250/person/year is the value of an additional species lost when 99% of species are lost already. It is not the value of losing 99% of species. "

To which John Quiggen replies:

But with Bt=B0, the measure is of the order of alpha, that is, about $50. So, the value of saving 1 per cent of species is about $50*0.01*B0/person/year, or around $7 million/person/year. So, if the quoted sentence is correct, the model would seem to imply the need for an all-out effort to minimise species loss. Fine, but the results don't seem to come out that way.

This being what is technically known as being between the cheap devil and the very costly sea. Tol can escape from the undervalue argument only by pushing the cost of 1% species loss up to several hundred times the average yearly income of everyone on earth.

UPDATE²: Richard Tol replies

Note that there is further confusion (partly caused by my attempt to explain things in simple terms).

The model is specified such that a warming of 0.025 ^oC per year (2.5 degree per century) would lead to the extinction of 0.1% of species. The value of $50/rp/yr is for 0.1% = 1,400 species (at present).

This then goes up to $250/rp/yr for 14 species at 99% biodiversity loss.

Quiggin:

Thanks, Richard, this explanation helps a bit. But 0.1 per cent of 14 million is 14 000, so we still have a factor of 10 missing somewhere.

Tol:

@John Q
Sure. I did the math wrong at my comment of 6.06 am.

(Another reason why blogs are bad for this sort of discussion.)

Eli: Not really, this is what goes on in the coffee room or at the blackboard, but note that with this back and forth, the cost in the model is $700,000 per person per year, in a world where the median income is less than $10,000 per person per year.

Bluegrue adds

I'd like to point out Richard Tol's explanation.

The model is specified such that a warming of 0.025 ^C per year (2.5 degrees per century) would lead to the extinction of 0.1% of species.

This description is correct, but keep in mind, that he is talking about a rate of 0.1% per year.

or ~10% per century.

-------------------------------------

Realistically, even a loss of a few percent of the species on earth would be an economic and humanitarian disaster. Richard appears to be rooting for the Grim Reaper. Eli notes the resemblance.

UPDATE: In the comments Jeff Harvey provides an expert estimate of the outer boundary

There is little doubt in my mind, speaking as a population ecologist, that it is dangerous talk to try and extrapolate the cost of losing additional species once 99% of species diversity has been extirpated. My view is that at this point, humans would almost certainly be amongst the victims. Even if we weren't, such a decimation of the planet's life support systems would mean that life is hell for the survivors. The value of remaining species would be either nil or infinity, depending on the roles they would play in maintaining conditions making the planet remotely habitable. But, to reiterate, such models in my view are useless because I do not think that any population of systems ecologists would even want to try and comprehend what the planet would be like if 99% of its species were gone. I think that things will start to get tough when we approach 20 or 30%, let alone 99.

---------------------------------------------

At 10% or so we might as well pack up the earth and head for Hansen 1.

"...Hansen's bones are quiet at last,
...No science disturbs the lucid line,
For sun-scorched Earthers tune their thought
To Offword Station 'Holocene-1'
From where they know just what they ought,
...memories of times past that should be banished
Only relics, philosophies and a parched wasteland lie below..." - Barry Brook

Well damn it all, it's the Callendar Effect after all

Hans Suess and Roger Revelle, in their pioneering work on CO2 exchange between the oceans and the atmosphere, referred to the greenhouse effect as the Callendar Effect

There is even a book, and the Callendar Effect is in Wikipedia

Eli joins the Trend Wars

Well, not really, but anyone with a wind up computer knows that Tamino is the king of trends and Lucia is a wanna be. Eli, the bunny, thinks trends are interesting for visualization. Gazing at the latest versions of global temperature trends while listening to the usual chorus of nothing has changed since 1998, it occurred to the Rabett that that was the wrong way of thinking about things.

Eli has been peripherally involved in some of this, pointing out that it is best to measure a baseline in a stationary period. While it makes no difference if the trend is linear, it does affect the numerical representation for non-linear trends, and yes, there are such periods in the instrumental temperature records. Yet, with greenhouse gas concentrations going up almost exponentially and the forcing being approximately logarithmic, linear is not a bad place to start.

For this exercise Bunny Labs is gonna use the NOAA instrumental surface temperature record for no particular reason, GISS gives you the same answer pretty much. Anyinterested bunny is perfectly welcome to use HADCRUT or whatever, Eli is only so interested.

Looking at the last 50 years it is pretty clear to carrot eaters (well, maybe no, but you stare at data long enough and you learn to spot this stuff, that there was a linear trend starting in ~ 1965 and extending to ~1996. Part of the reason this may be non obvious is that most graphs of temperature anomalies are wider than high, you have to blow up the vertical axis to see this clearly. Linear trends are easy to fit, and that is what Eli did
Equally clearly there is a large positive deviation ABOVE the trendline starting with the big 1998 El Nino. (FWIW, the fast down and up deviation in Dec 2002 (down) and Jan (up) 2003 is like stinky, gotta look into that. Since GISS mines NOAA and then adjusts it, this appears also in GISS). To first order it looks like global temperatures have been very high since 1998, well above the trend line with that exception. Eli thought about how to bring this out and came up with the following metric, average the deviation from the trend line over five years. Being lazy Eli is plotting this at the date of the end of the period, so don't tell him about packing the end of a series, this is scribble not JGR which is why the trend anomaly anomaly below starts in 1970.

Ask not, dear bunnies, whether the trend in the anomaly over the last decade is zero, ask why the anomaly for the past ten years was so far above the trend. Well, go off and read Tamino for at least part of the answer. By applying crude adjustments for volcanic and El Nino/La Nina forcings, T was able to linearize the trend, returning it to its post 1965 value, or at least went a long way towards that

This is, when a hare thinks about it, a graphical version of 10 of the last 12 years (again a WAGNER, close enough and too lazy to look it up, someone will come up with the numbers) have been among the hottest on record, but it takes out the gottcha tossed at Phil Jones.

Autres temps. Autres écrivains

Eli, as he approaches senility, has decided that Rabett Run needs upgrades or at least someone who, on occasion can be understood without Google translation (if you look closely, Rabettese is one of the languages on offer, but only at midnight). It is his privilege to introduce a new contributor, John Farley, a man who trusts his Dean enough to blog under his own name. John's scientific background is not so far from Eli's with a somewhat off beat sense of humor and a shared distaste for nonsense. John's first post is a letter to one of those editors.

John describes himself as a mad scientist. IEHO, a bit bothered would be more like it.

Allow Eli this opportunity to comment on the whole anonymouse bit. Michael Tobis has remarked on the rather lax attitude around here, and indeed, it has been somewhat abused in the recent past, requiring Eli to erect a Rabett Hole, where word salad will go to wilt (don't go there lest you are very very hungry and have had your distemper shots). Eli's attitude, comes from a long established regard for those who wrote under borrowed names, such as Sam Adams, and Sam Clemens. Just as importantly, when he was a cute little bunny, Eli used to love listening to the radio, especially at Christmas for the big Lone Ranger episode where the Masked Rider took off his mask in honor of his fallen ranger buddies. Now true this was radio, but it was, well radio, and Eli was a little bunny with a great imagination, something that stood him in good stead in love and science. As to who Eli is, well, you could go over to Climate Audit, use the Google, or wait for the Christmas episode. Oh yeah Eli harvests comments which contain the majic words so don't bother.

The Las Vegas Review Journal will never win a Pulizer Prize

The December 29 editorial in the Las Vegas Review-Journal (RJ), "Global warming?" repeats the RJ's past denial of manmade global warming. The editorial claims that there has been no warming in the past decade. The editorial confuses weather with climate: weather has short-term fluctuations, while climate is a running average of 30 years. In the short run, El Nino, La Nina, and solar cycles can affect the surface temperature. In the long run, these cyclical effects average out. The short term temperature fluctuations are often used by the global warming deniers to cherry-pick a beginning and ending date to "prove" a cooling trend or a constant temperature.

Looking at the very long run, in the last 120 years, the global temperature shows an unmistakable increase, as shown in this graph. Global temperature is increasing at 0.2 degrees centigrade per decade, in agreement with computer models.

Among climate scientists, the preferred term is "global climate change" rather than "global warming". Modern scientific understanding predicts an increase in global average temperature, and also an increase in extreme weather events. Here in the Mojave desert, the drought is predicted to continue, and that is consistent with our experience in recent decades. In colder regions, increased snowfall is predicted.

Consistent with the global warming picture, Arctic sea ice is decreasing. Just three years ago, this produced a dramatic development: Early European explorers sought a "Northwest Passage" in order to reach the Pacific Ocean by going through the Canadian Arctic. For five centuries they failed to find a Northwest Passage. But in 2007, the shrinking Arctic sea ice opened up the Northwest Passage to commercial ships without an icebreaker. This is a dramatic change, something new in the last five centuries.

Nor surprisingly, the ice sheets in Greenland and Antarctica are beginning to melt. This has contributed to a rising sea level, and the rate of rise has accelerated from 0.9 mm/year in 1870-1920 to 2.0 mm/year in 1920-1975 to its present value of 3.0 mm/year.

The RJ editorial makes a big deal about the question of whether the rise in temperature leads or lags the rise in atmospheric carbon dioxide. In fact, rising temperature can lead to increasing carbon dioxide concentrations, and in turn increasing carbon dioxide concentrations can warm the Earth. Thus temperature and carbon dioxide levels can rise or fall together over periods of centuries: the two trends reinforce each other in a positive feedback loop.

Before the industrial revolution, climate change was entirely natural. In the pre-industrial era, temperature rises were triggered by, subtle changes in the Earth's orbital motion, causing small changes in the sunlight reaching the Earth. In the last two centuries, burning of fossil fuels has raised the atmospheric carbon dioxide levels by nearly 40% over pre-industrial levels.

So it makes sense that before the modern era, the rise of temperature came first. In the modern era, the rise in carbon dioxide comes first. It's exactly what we expect to happen.

Many scientific societies have issued official statement acknowledging the reality of manmade global warming. In contrast, the global warming deniers are not supported by any scientific society in the world.

The picture of manmade global warming has been understood among climate scientists for a quarter of a century. The blogosphere has lots of deniers, but most of them are not scientists. Many of the deniers are supported financially by the fossil fuel industry or are motivated by ideological opposition to government regulation of the industry. The RJ editorial page, written by people with little or no science background, appears to be motivated by dogmatic Libertarian ideology.

If the RJ editorial were factual, the RJ would have refuted 97% of the world's climate change scientists. If the RJ editorial were factual, the RJ would then win (and deserve to win) at least a Pulitzer Prize, or maybe even the Nobel Prize. The RJ has never won a Pulitzer Prize and its record will be unchanged by this editorial.

Not all Libertarians are global warming deniers. For example, one prominent Libertarian and former denier changed his position in 2005 in the light of new evidence. Journalist Ronald Bailey, science editor of Reason magazine, proclaimed in an article entitled "We're All Global Warmers Now" that "Anyone still holding onto the idea that there is no global warming ought to hang it up."

Let me close with two helpful suggestions: (1) read the comprehensive article in the November 13 New York Times, headlined "As Glaciers Melt, Science Seeks Date on Rising Seas", documenting the melting of the Greenland ice sheet. (2) consult the excellent website www.skepticalscience.com, in which frequently raised objections by global warming deniers are answered convincingly.

Posted by John (We are still working with Blogger)

The Rabett hole

The place where word salad goes to wilt.

Clearing More Things Up

While sweeping the cobwebs out of the Rabett Run attic in preparation for new stuff, Eli came across a correspondence with Prof. Gary Yohe, which, perhaps, only perhaps mind you, casts some light on the recent controversies involving Richard Tol, Bjorn Lomborg and a cast of bunnies.

Eli wrote:

Sent: Friday, December 26, 2008 10:41 AM
To: Yohe, Gary
Subject: Copenhagen position paper

Dear Prof. Yohe,

In your position paper on the costs and benefits of climate change, written with Richard Tol for the second Copenhagen Consensus meeting, you use a 5%, declining to 4% discount rate. Would you tell me whether this rate was chosen by you and Tol independently or whether this was asked for or discussed with the organizers. Since different rates (3 and 6%) were used for all the other proposed actions and damage from climate change grows with time if there is no amelioration while the costs of other proposed actions are more evenly distributed in time this makes comparisons opaque. Moreover, the values used for the final ranking of issues appears to have relied on the 3% projections, meaning that climate change was itself discounted relative to the others.

Please note that this does not question your choice of a 5/4% scenario. As someone said, if we had examples of the future, we would have no need of models.

If you participated in the deliberations did this question arise and if so how was it dealt with?

Thank you for your consideration

To which Gary Yohe replied:

Mon, December 29, 2008 6:02:51 PM
Copenhagen position paper

Dear Eli:

We chose 5% falling to 4% because it ran between the 3% and 6% choices that the rules offered. Neither made sense for climate change, and Cline was criticized in 2004 because he chose a low discount rate. We thought that we would give it a try, and were surprised that be got a B-C ratio above 2.5 for mitigation, adaptation and R&D. Our choice, by the way, roughly coincides with Ramsey discounting with a pure rate of time preference equal to 3% and endogenous growth in per capita consumption.

You need not worry about being critical. Indeed, go ahead. Richard and I have, as you might know, been as critical of Stern for using one discount rate as we and others have been of his using a low one - so fair play is fair play. I attach a draft of a paper that explores the sensitivity of the SCC to distributions of pure rate of time preference and relative risk aversion that can be supported by empirical work. We get almost 2-thirds of the way to Stern!

Anyway, hope this helps,

Gary

Precedents can be found at Deltoid, Big City, Village Magazine, Irish Economy, and Think or Swim. Kåre Fog started this by noticing that his bete noire, Lomborg had compared the Yohe/Tol estimates for the cost/benefit of climate change and with estimates for other useful stuff using a 3% rate. Fog makes other, more important criticisms of Tol's FUND model, but the discount rate issue is the simplest to understand and has dominated outside criticisms. Tol apparently claimed that the FUND model could not be rewritten to use the 3% rate (although it has been used with other discount rates).

So this comes down to who stole the cheese or whether the rate was chosen independently or whether this was asked for or discussed with the organizers.

Wattsa Matta Wid Youse Guys

Somehow you missed why the last two paragraphs from the previous post about Nature's policies are important

We have not insisted on the deposition of some raw datasets (eg brain imaging data) because we accept that such deposition can undermine the originators' priority in generating research results. This can be a controversial issue, and we remain ready to review such principles, but as stated above, for pragmatic reasons, the communities rather than journals are ultimately the determinants of our policies.

Remember Yamal? and Bernie Mac's (well he IS a comedian) constant demands for raw datasets?

As for software, the principle we adopt is that the code need only be supplied when a new program is the kernel of the paper's advance, and otherwise we require the algorithm to be made available.

and hows about those "programs" when the algorithms were published?

Yes, Eli is stirring the pot

Eli Writes

Eli has, from time to time, traced the changing data sharing standards at Nature. These changes started soon after Philip Campbell became editor, thus, he recently, well ok, recently as in the past decade if decades start with the first year, took keyboard in hand and wrote: (some names and emails have been edited to protect the not so innocent and the innocent. YMMV)

Sent: 19 November 2010 16:01
To: Nature@nature.com
Subject: Changing data sharing standards

This is addressed to Phllip Campbell, Editor in Chief

Sir,

I am interested in the evolving data sharing standard for Nature, the motivation for the changes and the general experience editors and authors have had. Is there a published summary of this. There have been significant changes over the years, ranging from the early 90s

-----
Nature requests authors to deposit sequence and x-ray crystallography
data in the databases that exist for this purpose.
----

To a major change shortly after you became Editor in Chief

----
As a condition of publication authors are required to make materials and methods used freely available to academic researchers for their own use.
----

To the current standard

----
Therefore, a condition of publication in a Nature journal is that authors are required to make materials, data and associated protocols promptly available to readers without undue qualifications in material transfer agreements.

----
I am also interested in whether Nature considers algorithmic descriptions of protocols sufficient, or, as in the case of software, a complete delivery.

Thank you for your consideration, I remain

Very truly yours,
Eli Rabett

and received this reply. Pay particular attention to the last two paragraphs, which, as it were, are relevant to a number of well known whines (well you didn't think this post was going to be ALL nicey nicey?)

From: "Campbell, Philip"
Date: December 23, 2010 6:35:15 AM EST
Subject: RE: Changing data sharing standards

I am sorry that it has taken so long to reply to your e-mail. There is no published summary of the history of our policies about sharing data.

During my time as Editor-in-Chief we have consistently promoted the maximal sharing of data and materials associated with papers in Nature and all other Nature journals (the journals generally have common policies).

My own first initiative was to invite Floyd Bloom, then Editor-in-Chief in Science, to undertake a common change of policy insisting that all reduced structure data be deposited for immediate access rather than with a 6-month delayed release.

Another development was for Nature and sister journals to impose the MIAME standards for microarray data. This was a typical development in that we were involved in early discussions about standards and deposition, but had to wait for the community to finalize those standards and the databases, at which point we promptly insisted on them.

You will probably have seen our full statement of policy on data and materials here:
http://www.nature.com/authors/editorial_policies/availability.html

We have not insisted on the deposition of some raw datasets (eg brain imaging data) because we accept that such deposition can undermine the originators' priority in generating research results. This can be a controversial issue, and we remain ready to review such principles, but as stated above, for pragmatic reasons, the communities rather than journals are ultimately the determinants of our policies.

As for software, the principle we adopt is that the code need only be supplied when a new program is the kernel of the paper's advance, and otherwise we require the algorithm to be made available.

We are always open to suggestions about our policies.

Yours sincerely

Philip

Philip Campbell PhD
Editor-in-Chief, Nature
Editor-in-Chief, Nature Publishing Group

Rabett Run appreciates the reply. Tomorrow more from the Rabett archives.

The Ångström Effect

As the attentive (hey stop with the Facebook stuff you in the back) know, Eli has been going a few friendly rounds with John Nielsen-Gammon, who is not very happy with the term greenhouse effect, and is proposing "Tyndall Gas Effect" as a replacement. Well, Eli is quite happy with greenhouse effect, as it captures the core idea, that limiting the flow of energy out of a system will result in warming, and besides, Tyndall already has a milky effect in his name, and besides which, while the old guy did the first IR spectroscopy on gases, he never had anything to say about emission, aka backradiation.

With some help from the friendly hares in the neighborhood, Eli has found the seminal paper, by Anders Ångström, and, in his honor, proposes that in the spirit of replacing the perfectly useful Centigrade with Celsius, that if you really gotta do it and lose the useful analogy, well, ok, how about the Ångström Effect?

It's really nice when you consider that Ångström was the grandson of the guy they named the wavelength unit after AND the son of the guy who originated the sensitive IR detector that he used to measure backradiation.

Even better, best from Eli's POV, Harry Ångström is Rabbit.

Fourier and the greenhouse.

Ray Pierrehumbert has pointed Eli to a new book that he and David Archer have put together, The Warming Papers, a collection of foundational climate science papers with commentary. Unfortunately the price is high enough that bunnies gotta think this was put together as a text, or supplementary text for a course. Talk to Ray and David about that.

You can read sections at Amazon, and Eli points the bunnies at the first chapter, a discussion of Fourier's Mémoire sur les Températures du Globe Terrestre et des Espaces Planétaires

In thinking about the effect of the atmosphere on the Earth’s energy balance, Fourier drew on the behavior of a simple device invented by the Swiss Alpinist Horace-Bénédict de Saussure (1740–99). This device, called a heliothermometer, consisted of a wooden box insulated with cork and wool, with a lid consisting of one or more panes of transparent glass (Fig. 1). The interior walls were painted black so as to absorb nearly all the sunlight entering the box, and a thermometer was placed in the box so that its temperature could be determined. de Saussure devised this instrument as a means of measuring the intensity of sunlight, so that he could test the hypothesis that it is colder atop mountains because the sunlight is weaker there.

which pretty well describes the box that Roy Spencer built to demonstrate the existence of back radiation. In Ray's words: "Ok, well you might say that the heliothermometer is a kind of at tiny RABBIT-SIZED greenhouse :)"

One thing Fourier did not do was coin the term “greenhouse effect,” though his use of de Saussure’s heliothermometer as an analogue could be considered similar to a greenhouse analogue. de Saussure’s box is indeed a kind of miniature greenhouse. In any event, Fourier showed a clear awareness of the imperfection of the analogy, stating explicitly that the temperature in the hot box was influenced by turbulent heat transfers that have no proper counterpart in the planetary temperature problem.

Further, Fourier did not compute the temperature of the Earth in the absence of an atmosphere and concluded that it was colder than the observed temperature. In fact, he never actually computed the Earth’s temperature based on a balance between incoming sunlight and outgoing infrared, though he could have attempted this using the Dulong–Petit radiation law. It is not clear why Fourier thought the atmosphere had to have a warming role. Rather than this being demanded by too cold temperatures in the absence of an atmosphere, Fourier seems to be inferring that the atmosphere ought to act like a pane of glass in being transparent to sunlight but opaque to infrared; he shows awareness of the downward infrared radiated by the atmosphere, but it is not clear what the basis of Fourier’s leap of intuition about the atmosphere was. In any event, he was right, and his work stimulated a great deal of further research on the effect of the atmosphere on infrared, and ultimately Tyndall’s definitive experiments to be discussed next.

But Ray agrees with Eli that

And I applaud your defense of the term "Greenhouse Effect." People who quibble with it simply do not understand what an analogy is. Fourier doesn't use the term himself, but in his discussion of the De Saussure hot box (a kind of mini-greenhouse) he is quite clear and coherent about the nature of the analogy.

and makes a pitch

(See my translation of Fourier on my web page, or better, buy "The Warming Papers," recently out by me and Archer).

And, oh yes, with their winnings, Ray and David can buy a copy of the original

In: Annales de Chimie et de Physique, pp. 136-167, Tome XXVII, Octobre 1824. Paris: Crochard, 1824. Octavo, original printed wrappers, uncut. custom cloth box. Minor edgewear and foxing to wrappers, early stamp of the Académie d’Aix on first page of text (not affecting Fourier article); text exceptionally clean. Extremely rare in original wrappers. $3300.

Which brings us to the point that analogies are good, but never perfect. Like models, analogies are never complete but some are useful.

Required reading

Anders K. Ångström's report on the first systematic observations of back radiation from the Anders K. Ångström's atmosphere. Elegant, terse and lovely reading, from the Publication of the Pomona College Astronomical Society, 5, 78-86, (1916) and to be found as a scanned copy on the SAO/NASA Astrophysics Data System web site. Hidden in plain view, but a classic none the less. Thanks to Timothy Chase and Ray Pierrehumbert who put Eli on the scent. The picture is from an interview with Ångström in the WMO Bulletin

-------------------------------------

THE NOCTURNAL RADIATION
ANDERS K. ÅNGSTROEM

Even the Greek philosophers knew that the earth was sur­rounded by a transparent envelope having material properties. Anaxagoras, Empedocles and Hero had given evidences of this knowledge. The latter knew that the air could be compressed or extended, but to the common mind this knowledge of the materiality of the air did not penetrate until late; probably not before the re­searches of Galileo in the seventeenth century, and much later it was shown that the atmosphere radiates to us like a common body. Did you ever realize that we receive almost as much heat in a year through radiation from the atmosphere as from the sunlight itself? Before I go further I must recall to your mind some physical laws that are important for the understanding of the properties of the atmosphere. You probably know that a plate of glass is almost perfectly transparent to the visible rays; that is, to the relatively short rays of the spectrum; but is almost perfectly opaque to the long rays that are often called the heat waves. A glass window lets through the visible light from the sun, but it stops the dark, invisible heat radiations from a radiator or stove in the room. Exactly in the same way does the atmosphere. A very large part of the solar radiation is transmitted because its maximum intensity is in the short waves, but the dark radiation of our earth is almost perfectly absorbed. We know, however, that a body that absorbs strongly must also radiate strongly. If a body-a plate of glass, for instance-absorbs a fraction a of the radiation E (of wave length λ) from a black body, it also must radiate the fraction a of the radiation (of wave length λ) of a black body that has the same temperature as itself. This law of Kirchhoff is very important in the study of astrophysical problems. As a consequence of it we must conclude that the atmosphere must radiate back to the earth in a considerable degree. Now you will remember that a black body,-a piece of metal blackened by platinum black is almost perfectly black-will radiate in proportion to the fourth power of its absolute temperature. Its radiation R can be ex­pressed by the equation

R=cT⁴

Where T is the absolute temperature and c a constant factor. This constant c has been determined by Kurlbaum through experiment, and found to be 7.68x10^-11 if the radiation is expressed in calories per square centimeter per minute. If we now apply this law to the radiation out to space of a black body at the surface of the earth we find that this body at 15°C. temperature ought to lose 0.526 calories per square centimeter per minute through radiation. If we now perform the experiment in the night time, we will find that the black surface does not lose more than about 0.15 calories. The conclusion to be drawn herefrom is that the remaining 0.376 calories is radiated to the surface from some other source of radia­tion. This source of radiation is to a large extent the earth's own atmosphere, and in the following we shall assume this to be the case, ignoring the fact that a very small fraction of the radiation ought to be ascribed to planetary bodies. Evidently we can compute the radiation of the atmosphere if we know the "nocturnal radiation'' out to space, or the effective radiation, as we hereafter will call it. If we call the effective radiation R, the radiation of the atmosphere Ea, and the radiation that a black surface ought to emit Es, we shall have

R=Es-Ea =cT⁴-Ea
or Ea = Es -R = cT⁴- R

What does the radiation from the atmosphere depend upon? With what factors is this radiation found to vary? Why does the earth's surface lose more heat through radiation one night than another? All these questions we may try to answer by measuring the effective radiations and comparing them with observations in regard to the prevailing humidity, the temperature at the earth's surface, and the presence of clouds and dust of various origin in the air.

The first systematic observations upon this subject were made during an expedition to California in which Professor Brackett, Dr. E. H. Kennard, Professor R. D. Williams and Dr. Will Brew­ster cooperated with the author. The effective radiation to space was measured under most different atmospheric conditions. Ob­servations were taken at Claremont and at the summit of Mt. San Antonio (3,000 meters) simultaneously. At Indio in the Salton Sea Desert, the radiation was measured when the tempera­ture was more than 30°C, and at the same time the effective radia­tion was observed amid snow and ice on the summit of Greyback. During about fourteen days, observations were made at Lone Pine, altitude 1640 m., at the foot of Mt. Whitney, and during the same time observations were taken on the summit of this rocky moun­tain, which has been called the roof of the United States - quite a prosaic name for a very glorious place! I am writing these pages sitting in. a little shelter in the most northern part of Lapland, where the sun has been under the horizon for over two months. I have made observations here, under a temperature of -20°F. (-30°C.), and I am thinking back with pleasure of the party that accompanied me on this fine trip to Mt. Whitney, and climbed those white, sparkling slopes where the snow was as white and almost as abundant as here. But I will leave these pleasant re­membrances, and describe for you the instrument that we used, and afterwards I will try to give a survey of the results that we obtained.

The principle of the instrument that was constructed by my father, Professor K. Angstrom of Upsala, is as follows: Suppose that a blackened strip of metal is brought to radiate to the night sky. It will cool down to a temperature below the surroundings, and at this temperature as much heat will be carried to the sur­face through convection through the air as is lost by radiation to the sky. The temperature of the strip will, however, fluctuate very much, because of changes in the convection. When it is calm the convection is small; when the wind is blowing it is larger. There­fore we cannot determine the radiation from the temperature fall of the strip. If, however, we can arrange in some way or other to produce exactly the same amount of heat in the strip as is going away through radiation we can keep the temperature the same as that of the surroundings, and the convection will consequently be nil. In our instrument this production of heat was gained by an electric current which was sent through the strip and could be regulated by means of a sliding resistance. The current necessary to heat the black strip till it had the same temperature as a bright one exposed in exactly the same way was read on a milliammeter. The radiation is proportional to the square of the current used. After these suggestions, Figure 1 will probably be easily under­stood. There are two black strips in the series, as well as two bright ones, the quality of their temperature is controlled by the use of thermo-junctions fastened on the back of them.

The observations made at different places with this instrument have led to results that I have summarized in the following con­clusions, some of which, however, need to be confirmed by further experiments.

Fig. 1-The Pyrgeometer

M-Four thin manganin strips. T-Thermometer bulb. G-Galvanometer.
R-Resistance. A-Milliammeter. E-Battery.

1. The variations of the total temperature radiation of the atmos­phere are at low altitudes (less than 4500 m.), principally caused by variations in temperature and humidity.
2. The total radiation received from the atmosphere is very nearly proportional to the fourth power of the tempera­ture at the place of observation.
3. The radiation is dependent on the humidity in such a way that an increase of the water-vapor content of the atmos­phere will increase its radiation. The dependence of the radiation on the absolute humidity at the place of obser­vation has been expressed by an exponential law.
4. An increase in the water-vapor pressure will cause a decrease in the effective radiation from the earth to every point of the sky. The fractional decrease is much larger for large zenith angles than for small ones.
5. There is no evidence of maxima or minima of atmospheric radiation during the night that cannot be explained by the influence of temperature and humidity conditions.
6. There are indications that the radiation during the day-time is subject to the same laws that hold for the radiation during the night-time.
7. An increase in altitude causes a decrease or an increase in the value of the effective radiation of a blackened body toward the sky, dependent upon the value of the tempera­ture gradient and of the humidity gradient of the atmos­phere. At about 3,000 meters altitude of the radiating body the effective radiation generally has a maximum. An increase of the humidity or a decrease of the tempera­ture gradient of the atmosphere tends to shift this maxi­mum to higher altitudes.
8. The effect of clouds is very variable. Low and dense cloud banks cut down the outgoing effective radiation of a blackened surface to about 0.015 calorie per cm² per minute; in the case of high and thin clouds the radiation is reduced by only 10 to 20 per cent.
9. The effect of haze upon the effective radiation to the sky is almost inappreciable when no clouds or real fog are formed. Observations in Algeria in 1912 and in Califor­nia in 1913 show that the great atmospheric disturbance caused by the eruption of Mount Katmai in Alaska, in the former year, can only have reduced the nocturnal radia­tion by less than 3.0 per cent.
10. Conclusions are drawn in regard to the radiation from large water surfaces, and the probability is indicated that this radiation is almost constant at different temperatures, and consequently in different latitudes also.

Fig. 2-Atmospheric Radiation and Temperature. Indio, Cal., 1913
Log E_at = Const. + a log T.

This article would exceed the limit of this Publication if I entered into a discussion of the results. I will confine myself to referring to the Figs. 2 and 4, and let them speak their clear and concentrated language. You will find that the water-vapor exerts quite a marked influence upon the radiation of the atmosphere, and consequently upon the nocturnal radiation also. This is quite natural. Suppose we dissolve the dark red substance known as potassium permanganate in water. The more we dissolve of the salt, the less transparent will be the solution. In the same way the air will be less transparent for the long invisible rays, the more water-vapor there is dissolved in it, and the less transparent the atmosphere is, the more it will radiate.

Fig. 3-Humidity and Radiation of the Atmosphere

Circles represent observations at Indio. Double circles represent
observations at Mount San Antonio and at Lone Pine Canyon. Crosses
represent observations at Lone Pine. Points represent observations
at Mount San Antonio and at Mount Whitney.

A consequence of the nocturnal radiation is the cooling of the surface of the earth below the temperature of the air above. If there were no convection currents through the moving air, this cooling would always be proportional to "the radiation. At Abisko in Lapland I found that a snow-surface sometimes had a tempera­ture about 6 or 7 degrees C. under the temperature of the air. This cooling is of interest for agricultural questions; viz., for the knowledge of the conditions favoring night frosts. Observations of this kind are easy to make, and seem to be lacking. A plan for such observations is the following: Observe with a good ther­mometer, that you are able to read to the tenth of a degree, the temperature (1) half a meter above the surface of the earth; (2) at the surface, noting down how much the bulb of the thermometer is below the surface; (3) two cm. below the surface. Care must be taken (1) that you observe at a place where the horizon is as free as possible; (2) that you define the surfaces at which you ob­serve as well as possible (sand, grass, corn-field, specific gravity, etc.); (3) that your thermometers are well tested for stem-correc­tion, which may be done with sufficient accuracy by putting the thermometer in melting snow, that only covers the bulb, and read­ing the temperature above zero. The thermometer ought further to be tested for zero and boiling point. If these observations are carefully made, any local meterological paper will be glad to pub­lish the results. It would be desirable that these observations should be made in the neighborhood of places where other meteoro­logical elements are observed.

Fig. 4

Before I finish this little review, I will take the opportunity to express my thanks to the members of Pomona College who have contributed to the successful results of my expedition. My kindest regards to Professor Brackett, Professor Williams, Mr. Brewster, and - if his eyes should fall on these lines-to Dr. Kennard.

Very truly,
Anders K. Ångström.

Eli Luntz

Atmospheric carbon contamination.

That is all. You could add irresponsible atmospheric carbon contamination if you have the full nine seconds.

Letters to the Editor

Peer review lives, and has sharp teeth and claws. By way of Medical Writing, Editing and Grantsmanship, the Editors of Environmental Microbiology, select their best reviewers comments of the year, of which Eli posts a few -

• The biggest problem with this manuscript, which has nearly sucked the will to live out of me, is the terrible writing style.
• The lack of negative controls. . . . results in the authors being lost in the funhouse. Unfortunately, I do not think they even realize this.
• Well, I did some of the work the authors should have done!
• I suppose that I should be happy that I don't have to spend a lot of time reviewing this dreadful paper; however I am depressed that people are performing such bad science.
• This is a long, but excellent report. I had considered asking for EMSAs, but these will not significantly improve the study. It hurts me a little to have so little criticism of a manuscript.
• Season's Greetings! I apologise for my slow response but a roast goose prevented me from answering emails for a few days.

and the winner

This paper is desperate. Please reject it completely and then block the author's email ID so they can't use the online system in future.

Happy New Year

Dying Departments

With the downtick in the general welfare, universities and colleges have been trolling for deadwood. The axe has been falling on classics, philosophy, modern languages and such, which, of course, classicists, philosophers and modern language folk think destroys the thinking part of the academy. The general criterion is that there are few majors and there are very few.

Ben Hale, one of Ethon's favorite Boulderites, and an ethicist, is, as you can imagine, not pleased, and points to this piece of deception as a brilliant reply. Everyone is entitled to their mistakes.

However, as usual, this is not the point. Anyone who follows these things realizes that physics department have been undergoing the same trimming for decades now, driven by the decline in majors and the huge costs of maintaining a laboratory science program for the few left. The job bust in physics which started in the early 1970s has not helped. Chemistry at least has a chance of surviving because it has two major general education course, and biology, well, biology has pre-meds, lord bless their very little souls, but increasingly chemistry and physics departments are being shoved together, and there are very weird combinations as well as catchalls such as natural sciences, physical sciences, and so forth.

APS News writes:

Because of shortfalls in revenue, state boards of education have been forced to scrutinize the academic programs offered at schools and universities under their purview.” The result is that universities have had to make significant budget cuts,” said Theodore Hodapp, APS Director of Education and Diversity. “Physics is almost always on the chopping block because of the small number of majors at these smaller schools.”

Universities have had to take a hard look at enrollment in their offered courses, and often they’ve scaled back the physics programs, either by cutting certain physics-related majors, or physics majors themselves.

Hit hardest by state cuts is the Northwestern State University in Natchitoches, Louisiana, which dropped eight degree programs including its physics major, its chemistry major, its physics education major and chemistry education major.

“They’ve terminated both physics and chemistry, along with a couple of other programs at the end of the spring semester,” said Paul Withey, the head of the physics and chemistry department,

All the full-time positions will be cut, and the school plans on hiring instructors to teach the basic and service courses. Tenure has been revoked for professors in the affected departments. The university offered instructor positions to the formerly tenured faculty at a significant pay cut, but those affected have shown little interest in the offer.

“It took us all by surprise that not only would all the programs be eliminated, but also all the faculty,” Withey said “Physics is such a fundamental science, and it applies to all the other sciences and engineering. It doesn’t make sense for a university to completely eliminate the degree.”

Missouri has also had to cut out the physics major at Northwest Missouri State University in Maryville, MO.

“The governor of Missouri ordered a program review of all campuses in the state of Missouri system and said he’d consider eliminating all programs that graduate less than ten students a year,” said John Shaw, an associate professor of theoretical physics at Northwest Missouri State. “At Northwest they have eliminated a number of programs, of which the physics program was one.” The physics program at Northwest Missouri State graduated on average between one and two undergraduate majors.

“It was primarily because of low graduation rates in those areas,” said Douglas Dunham, Provost of the university. “It was hard to argue at the state level over the last four years that it was a program we should keep.”

Most colleges and universities only need a small number of people to teach the introductory/survey courses in any subject. On the other hand, departments at R1s or the equivalent in other lands, often have more faculty than majors. How can this be. Soft money, lots of positions supported by research grants, which, in turn support graduate students, who become post-docs and then get soft money positions. This model has worked for sixty years, but it may not work very well in the future. It is inherently unstable.

What effect

So John Nielsen-Gammon has been trying to explain the greenhouse effect and climate disruption, and not doing a bad job, but Eli has some problems with his trying to rename the greenhouse effect the Tyndall gas effect. Now Eli has some problems with the general idea that "the greenhouse effect is nothing like a greenhouse, basically that both work by restricting the flow of heat out of the system, one by restricting radiation, the other by restricting convection. Of course the details differ, but that is the difference between an analogy and a detailed description. However, as the saying goes, that has nothing to do with this case, which arises from John's invoking Tyndall.

Now true, Tyndall was the first to describe infrared absorption, but a) he already has his effect and b) IEHO the greenhouse effect has more to do with IR radiation, which raised a simple question, who was the first to observe radiation in the infrared from the atmosphere? Eli has asked a few people, and the general answer is good question, don't know. So here is your chance.