Does a warm climate discourage economic output?

by on December 17, 2013 at 2:31 pm in Economics, History, Science | Permalink

Geoffrey Heal and Jisung Park have a new paper “Feeling the Heat: Temperature, Physiology & the Wealth of Nations,” here is the abstract:

Does temperature affect economic performance? Has temperature always affected social welfare through its impact on physical and cognitive function? While many studies have explored the indirect links between climate and welfare (e.g. agricultural yield, violent conflict, or sea-level rise), few address the possibility of direct impacts operating through human physiology. This paper presents a model of labor supply under thermal stress, building on a longstanding physiological literature linking thermal stress to health and task performance. A key prediction is that effective labor supply – defined as a composite of labor hours, task performance, and effort – is decreasing in temperature deviations from the biological optimum. We use country-level panel data on population-weighted average temperature and income (1950-2005), to illustrate the potential magnitude of the effect. Using a fixed effects estimation strategy, we find that hotter-than-average years are associated with lower output per capita for already hot countries and higher output per capita for cold countries: approximately 3%-4% in both directions. We then use household data on air conditioning and heating expenditures from the US to provide further evidence in support of a physiologically based causal mechanism. This more direct causal link between climate and social welfare has important implications for both the economics of climate change and comparative development.

The NBER version is here, I do not otherwise see ungated access.

Steko December 17, 2013 at 2:53 pm

Doesn’t this function a bit like an oil price shock? Hot years = higher electric bills for hot countries and lower heating costs for cold countries, etc.

Steve Sailer December 17, 2013 at 3:08 pm

I went to Rice U. in Houston from 1976-1980, and it was the universal view of old-timer locals that the spread of air conditioning was the sine qua non of the rise of Houston.

msgkings December 17, 2013 at 3:46 pm

I have heard that Houston is the most air conditioned (large) city in the world, being the largest city in a first world country closest to the equator. But I heard that 25 years ago, could be they’ve been passed up by Hong Kong or Singapore or even Bangkok. Also, not sure how they derived ‘most’ there, if it’s % of buildings with air conditioning then it might still be the leader…but then can we be sure they have a higher % than Miami? Or perhaps Miami doesn’t really qualify as a large city on a global scale.

Steve Sailer December 17, 2013 at 3:52 pm

Much of Tom Wolfe’s “The Right Stuff” is set in the Houston area, where Mission Control was based. Wolfe had great fun with 1960s Houston’s show-offy levels of air conditioning: “The hotel was air-conditioned Texas-style; that is to say, within an inch of your life.”

I’m sure Dubai or some place like that has surpassed Houston by now.

dearieme December 17, 2013 at 3:56 pm

When we lived in Queensland we were told “For eight months of the year it’s too nice to work, and for the other four it’s too hot.” By “too hot” they meant hot and humid.

Tim December 17, 2013 at 3:56 pm

Houston is a much bigger city than most people realize. Bigger than Miami. And the downtown has a system of underground air-conditioned pedestrian concourses.

DCBillS December 17, 2013 at 4:43 pm

Depends on how you define it Tim. Limited to city definitions you are correct but the Miami area is unfortunately a monster. It is built solidly from Jupiter to Homestead, about a hundred miles.

Steve Sailer December 17, 2013 at 5:10 pm

Florida south of the Panhandle, especially inland Florida, was pretty much uninhabited by white people until the 20th Century. I’m not sure what changed early in the 20th Century before home air conditioning came along; perhaps the electric fan made Florida more habitable?

Alexei Sadeski December 17, 2013 at 9:19 pm

Houston is the 5th largest US city (6.17MM), Miami 8th largest (5.76MM).

http://en.wikipedia.org/wiki/List_of_Metropolitan_Statistical_Areas

babar December 17, 2013 at 9:55 pm

steve, i think the reason was that railroads were built to take fresh fruit to the north, and that meant that big money could be made.

Careless December 17, 2013 at 11:39 pm

Hong Kong is famous for air conditioning the hell out of things.

Someone from the other side December 18, 2013 at 3:35 am

Another reason why I prefer SG – possible to survive in a tshirt and shorts indoors in most places whereas in HK you at the very least need a sweater and proper shoes if you don’t want to freeze to death

Someone from the other side December 18, 2013 at 3:32 am

Wait what??? Singapore (about as first world as you can get) is almost smack-dab on the equator and seems to have a roughly equivalent population

Brenton January 7, 2014 at 6:45 pm

Probably far less cubic feet of indoor space per person though.

Axa December 18, 2013 at 6:19 am

The old battle of air conditioning vs heating. Somehow for greens and intellectuals air conditioning is morally reprehensible while heating is simply invisible. Guess what? http://www.eia.gov/todayinenergy/detail.cfm?id=10271

This is not about cold vs warm but how easy is to get to the ideal 21°C or 70 F depending on where you live. Perhaps the lag in development that countries with warm weather have experienced is because the technology to get your body to comfortable levels is more complicate. In cold weather all you need is a 4 walls, a roof and plenty of wood to burn to be comfortable. This technology has been widely used for thousands of years. In late centuries the fuel have changed to coal, heavy oils or natural gas but the principle is the same: burn something. While, in warm weather you need XX century technology (electricity and a compressor with moving parts) to get the optimal temperature level to sustain productivity all year long.

So, as long as people in warm regions raise their income to be able to afford electricity and air conditioning they’ll have the same level of comfort of Netherlands or Germany in XVI century.

Steve Sailer December 17, 2013 at 3:08 pm

It could be that there is an ideal latitude at which the cost of keeping the brain warm is balanced by the cost of keeping the brain cool at lowest overall cost. In 1911, Yale Professor of Geography Ellsworth Huntington conducted a study of climate’s effect on human achievement. He concluded that the ideal climate was roughly that of New Haven, Connecticut. In a recent article, Malcolm Gladwell had great fun with that: here we are, 100 years later, and we can see what a biased moron Huntington was! Proving how much things have changed in 100 years, Malcolm’s article appeared in that glossy, ad-packed magazine, The Lagoser.

dearieme December 17, 2013 at 3:57 pm

The optimal climate is, philosophically speaking, in a band of latitude between Athens and Edinburgh.

Alan December 17, 2013 at 5:46 pm

Which is roughly the same as Seoul to Harbin.

dearieme December 17, 2013 at 7:24 pm

yeah, but you have to be towards the west coast of a continent, not the east.

Alan December 18, 2013 at 2:13 am

Yep. See also Vancouver to San Francisco.

Steve Sailer December 17, 2013 at 3:25 pm

Before antibiotics and good urban water and sewage systems, death rates from infections were correlated with latitude in the U.S., although the correlation was opposite for whites and blacks.

As Brandeis historian David Hackett Fischer pointed out in his famous Albion’s Seed, these racial differences had an enormous impact on the history of America. He notes that the cold climate of colonial Massachusetts:

“proved to be exceptionally dangerous to immigrants from tropical Africa, who suffered severely from pulmonary infections in New England winters. Black death rates in colonial Massachusetts were twice as high as whites’ – a pattern very different from Virginia where mortality rates for the two races were not so far apart, and still more different from South Carolina where white death rates were higher than those of blacks. So high was mortality among African immigrants in New England that race slavery was not viable on a large scale, despite many attempts to introduce it. Slavery was not impossible in this region, but the human and material costs were higher than many wished to pay. A labor system which was fundamentally hostile to the Puritan ethos of New England was kept at bay partly by the climate.”

Also, the high death rate from summer infections in the South kept the white population dispersed: the safest way to live was like George Washington’s Mt. Vernon — an isolated house on top of a hill near a tidal river with all the trees running down to the water chopped down to allow the breeze to blow on the living quarters as much as possible. In the North, densely populated commercial cities like Boston and New York could arise, but Southerners preferred to live spread out, in part to cut down on the number of epidemics that would rip through warm weather cities. The Scots-Irish avoided lowlands and stuck to the hills where the weather was cooler and the disease burden was less.

These patterns of settlements affect regional attitudes to this day.

Shane M December 17, 2013 at 6:08 pm

interesting post. I’d never thought of it that way, and was unaware of the difference in racial mortality rates across regions.

prior_approval December 18, 2013 at 12:12 am

But the slave owners knew – it was part of the business model, after all.

Steve Sailer December 18, 2013 at 12:54 am

An interesting question is what would the economic development of the United States have been like if Northeastern slavetraders and Southeastern slavebuyers had shunned the slave trade. Could the cotton belt have been developed without a workforce already evolved to resist warm weather diseases?

My guess is that states like Alabama would have lagged the way Florida lagged. The population of Florida south of the Panhandle didn’t really take off until the 20th Century. Inland Florida was a miserable place before things like electric fans. Without slavery, states like Mississippi probably would have been only modestly populated until later in the 19th Century.

But economic development would have come in due time and the south would have caught up eventually, just as Florida caught up rapidly once the technology was ready.

Ray Lopez December 17, 2013 at 7:22 pm

This is just David Landes with charts and more data. Nothing new here. And arguably with climate control this is irrelevant today.

- RL

http://www.nytimes.com/books/first/l/landes-wealth.html

Yet we are not the wiser for denial. On a map of the world in terms of product or income per head, the rich countries lie in the temperate zones, particularly in the northern hemisphere; the poor countries, in the tropics and semitropics. As John Kenneth Galbraith put it when he was an agricultural economist: “[If] one marks off a belt a couple of thousand miles in width encircling the earth at the equator one finds within it no developed countries…. Everywhere the standard of living is low and the span of human life is short.” And Paul Streeten, who notes in passing the instinctive resistance to bad news:

Perhaps the most striking fact is that most underdeveloped countries lie in the tropical and semi-tropical zones, between the Tropic of Cancer and Tropic of Capricorn. Recent writers have too easily glossed over this fact and considered it largely fortuitous. This reveals the deep seated optimistic bias with which we approach problems of development and the reluctance to admit the vast differences in initial conditions with which today’s poor countries are faced compared with the pre-industrial phase of more advanced countries.

Steve Sailer December 17, 2013 at 7:47 pm

Here’s my review of Landes’s “The Wealth and Poverty of Nations” in National Review:

http://www.isteve.com/wealth.htm

Ray Lopez December 17, 2013 at 11:15 pm

Thanks SS. Surprised even National Review published this work but it certainly would resonate with certain people. II fully appreciate your racist views, coming from Greece, where I’ve lived, a lot of people think the Greeks are God’s Chosen. Sort of like the Jews (book to read: Athens and Jerusalem by Leo Strauss, flip sides of the same coin like Bullock’s thesis on tyrants, which I see some dude has rewritten on Amazon as When Athens Met Jerusalem: An Introduction to Classical and Christian Thought by John Mark Reynolds). I personally think western advocates are simply mistaking accidents of history for good planning, though there’s no denying the facts it’s the West vs the Rest. Then again I date inter-racially so some bias on my part. E.g., the Greeks built with stone, as did the Jews, while the rest of the people built with wood, and/or did not have the wheel and steel. Diamond’s thesis. Anyway this is neither the time nor place for further discussion, we could spend hours. And BTW I heard chopsticks were invented in Japan *after* the fork was. It was just a conscious fashion statement that caught on. Efficiency dictates the fork will win, but, like Keynesianism in economics vs the laisse faire Austrian school, ‘fashion is fashion’. See you later, blog on.

Robert December 19, 2013 at 2:02 am

Hm? Greeks built plenty of wooden structures and none survived, although roman wooden structures have been unearthed. The Greek stone buildings are copies of wooden structures anyway.

Also chopsticks are extremely efficient both in construction, materials involved, using, cleaning and disposing. The lazy European fork is nowhere near the chopsticks.

Interesting footnote: Some people attribute the metal chopsticks used by Koreans as one of the reasons behind their skillful use of machinery and tools. Metal chopsticks are the most complicated ones to use and require the user to develop a great manipulation skils.

Besides, it all beats eating with your hands.

Enrique December 17, 2013 at 3:32 pm

This analysis presupposes that there is a fixed optimal level of production regardless of temperature, when in reality, the optimal level probably depends on the temperature itself …

Matt December 17, 2013 at 3:38 pm

Isn’t this less about whether the temperature is hotter and more about whether the temperature is closer to some optimum level?

Kabal December 18, 2013 at 12:18 am

Indeed.

On a side note, “Feeling the Heat” was the best title they could come up with? A bit corny. Unless they were intentionally being ironic…

John Mansfield December 17, 2013 at 4:13 pm

A hotter-than-average year does more to a hot country than just direct effects on human biology. Was that separated out somehow?

Willitts December 17, 2013 at 4:20 pm

No, it is far more likely that:
1) warmer climates give a comparative advantage to agriculture over manufacturing
2) colder climates demand faster development of energy

The paper looks at the extremely short run effects which really arent of much economic interest. Who would guess that bad working conditions lower productivity? Next they’ll be telling us that water is wet.

Ray Lopez December 17, 2013 at 11:32 pm

Good observation, plants grow faster in the tropics, but often the soil is POORER. Yes, you read that right. Africa has poor bleached soil, as does South America as does Australia. Europe and North America have great soil due to the glaciers scraping it off and depositing it there. So the Europeans and Native Americans stole everybody else’s good soil. China’s soil is good–but in arid Mongolia.

Cliff December 17, 2013 at 11:49 pm

Don’t South America, Africa and Australia extend almost to Antarctica? Isn’t Australia a big agricultural producer? Wherever Europe and North America got its soil, it wasn’t from South America, Africa, and Australia.

Steve Sailer December 18, 2013 at 12:26 am

The American Midwest has famously excellent soil in many (but not all) places. Texas has much poorer soil than Iowa, on average.

Much of Africa and tropical South America has poor land for farming. Endless tropical rain with no glaciers and/or volcanoes to stir things up leaches many of the nutrients out of the soil.

Willitts December 18, 2013 at 2:03 pm

Our famous Midwest soil comes from glaciers pushing it here during the last ice age. Those same glaciers created a remarkable drainage system that deposits alluvial soil on the banks.

Alan December 18, 2013 at 2:21 am

No: Africa and Australia extend towards the pole about as far as Los Angles and Nova Scotia, respectively. Australia is a big agricultural producer – of plants and animals originating in Asia and the Middle East. Sheep, cattle, pigs, wheat, barley, rice, grapes etc, were all introduced by Europeans. The only Australian native plant grown in commercial quantities is the macadamia.

Brian Donohue December 18, 2013 at 9:28 am

I heard that Australia has the planet’s worst soil. Something about nutrient leeching on accounta the land not being ‘turned over’ cuz geology.

Ryan December 17, 2013 at 4:23 pm

A reexamination of environmental determinism?

http://en.wikipedia.org/wiki/Environmental_determinism

Steve Sailer December 17, 2013 at 8:40 pm

“The experience of environmental determinism has left a scar on geography, with many geographers reacting negatively to any suggestion of environmental influences on human society.”

Boy, that Wikipedia article makes depressing reading for anybody who thinks, as Animal House tells us, that knowledge is good

mulp December 17, 2013 at 4:24 pm

Warm climates appeal to the conservative desire for a free lunch.

After all, in a warm climate, all you need to do is go out and pick or dig up lunch. No need to invest in the capital of methods of storing food or saving food. Of course, food in warm climates almost 100% defy any storage at all. Only two types of the thousands of kinds of bananas can be transported more than a few miles and not be consumed within a couple of days.

In a warm climate, you labor and consume immediately.

In cold climates, labor must be invested in building up capital – stores of food to be eaten later, labor to build shelter for later, labor to bring in stores of fuel for the winter. The land does not offer free food every day of the year. No free lunches. Lunch requires sacrifice, either not eating everything you harvested for the day, or eating only part of what you have stored away in your larder.

When accustomed to sacrificing the fruits of labor, you begin to labor to produce things for longer and longer spans of use.

But even warm locations suffer the cycle of nature, so the Egyptians, for example, organized the building of warehouses and putting away stores of food for the cycles of the year, and for the cycle of periodic drought. That capitalistic organizing principle led to a society that built great monuments, built by skilled laborers paid according to skill, not the imagined slaves. Egypt was able to devote labor to non-consumption because the food from the fertile time was put aside for later. It could be the monument building was a way to redistribute the wealth – the government had organized the storage of food, so it got to redistribute the food as a way to reward labor on government projects.

Ricardo December 17, 2013 at 10:57 pm

What is this business about warm climates being some of Garden of Eden with limitless harvests? Malnutrition is a serious problem in the poorer parts of tropical Southeast Asia and many people there survive by growing rice which requires lots of hard work and investment in irrigation and fertilizer.

anthony December 17, 2013 at 11:22 pm

American conservatives are hedonists who prefer to live in warm, weather-wimp states. They think nature’s bounty is there for the taking, and therefore there is no possibility they could ever, ever be poor. (P.S., l live in Chicago; I remember seeing David Axelrod on the U. of C. campus but was done with school by the time David Brooks showed up.)

TMC December 18, 2013 at 11:56 am

“Warm climates appeal to the conservative ”
“In cold climates, labor must be invested in building up capital ”

Yet the conservatives are evil capitalists.
Orwell would be proud of you mulp.

Chip December 17, 2013 at 8:29 pm

Eh?

Conservatives embrace the free lunch, and shun sacrifice and planning?

So the Tea Party movement and fiscal hawks in general are liberals?

I don’t like the con-lib paradigm much but I think you’re a little confused.

As for optimal climates for development, civilization rose quickest in places where winter forced people to plan for the future.

Today, that’s not so much a consideration as countries like Singapore attest. Though Singapore was built by migrants from colder climates (English and Chinese) so maybe the benefits of cold weather planning continue to accrue.

Ak Mike December 17, 2013 at 9:34 pm

Chip, where did you get the idea that “civilization rose quickest in places where winter forced people to plan for the future”? That seems to be the reverse of the truth. For most of the six or seven thousand year history of civilization, it has been confined to warm places – Egypt, Mesopotamia, India, China, maybe Greece and Italy. It’s only in the last thousand years or so that any cold places have been literate.

Chip December 17, 2013 at 10:06 pm

“In Mesopotamia the solar year was divided into two seasons, the “summer,” which included the barley harvests in the second half of May or in the beginning of June, and the “winter,” which roughly corresponded to today’s fall-winter.”

All those places you mentioned had winters to plan for, except for Egypt where the seasonal flooding of the Nile took the place of winter as a reason to plan ahead.

And note the ‘quickest’ expansions of civilizations took place in Europe and China, which had sometimes severe winters to deal with.

And it’s the descendants of these Europeans, Chinese and other winter peoples in Korea, Japan etc that continue to excel in the modern world.

Ak Mike December 18, 2013 at 12:46 am

Well, if “winter” just means a season that’s different than summer, pretty much every place has some kind of winter (even India, where it’s plenty warm all the time, has a rainy season). In that case your point is trivial, because planning is required everywhere.

But if you are trying to suggest that places that get cold have an advantage, history falsifies that position. For nine tenths of civilization’s history warm-weather cultures dominated, including Rome, Mesopotamia, India, etc. Currently China’s most dynamic city is Hong Kong, which is subtropical. The cold countries with a real winter have been on top for less than five hundred years, and warmer places are now catching up again. (By the way, I personally prefer the cold, I live in Alaska.)

Chip December 18, 2013 at 5:08 am

It’s not just a ‘season.’

It’s a period in which food growing finishes or disappears completely, requiring people to plan ahead. This happened in all the places you cited.

And descendants of unusually cold places have dominated the world in the modern era.

Whether this predilection for delaying gratification and thinking ahead are now hardy cultural norms, or whether it has a genetic component in that those who didn’t plan ahead died, I have no idea.

But the cycle of planting, harvesting and storing for winter seems rather important for accelerating civilizational attributes.

Steve Sailer December 17, 2013 at 10:57 pm

See Marginal Revolution on Michael Hart’s Understanding Human History:

http://marginalrevolution.com/marginalrevolution/2007/09/why-did-the-ind.html

Agriculture, and thus civilization, tends to get started where growing seasons are fairly long, then move north as crops slowly get adapted to shorter growing seasons.

(China being an exception.)

Willitts December 18, 2013 at 2:13 pm

No kidding that early civilizations developed in moderate climates. Strip you naked of technology and where would you choose to live?

As technology advanced, cultures spread out to colder climates where the enviroment further challenged them to innovate.

Do you think it is a coincidence that power has been shifting away from the equator during the past millenium?

Also, when early civilization developed, the climate in those areas was much wetter and soil better. Remember that modern civilization developed in the wake of an ice age.

Careless December 18, 2013 at 2:18 pm

You think ancient China was warm? They didn’t start out in Hong Kong, you know.

Anti-ummmmm December 17, 2013 at 9:00 pm

10 Facts About The Growing Unemployment Crisis In America That Will Blow Your Mind

#1 The percentage of working age Americans with a job fell to 58.3 percent in October. The lowest that number has been at any point since the year 2000 is 58.2 percent. In other words, there has been absolutely no “jobs recovery”. During the last recession, the civilian employment-population ratio dropped from about 63 percent to below 59 percent and it has stayed there for 50 months in a row. Will the percentage of working age Americans with a job soon drop below the 58 percent mark?…

#2 The U.S. economy lost 623,000 full-time jobs last month. But we are being told to believe that the economy is actually getting “better”.

#3 The number of American women with a job fell by 357,000 during the month of October.

#4 The average duration of unemployment in October 2013 was nearly three times as long as it was in October 2000.

#5 The number of Americans “not in the labor force” increased by an astounding 932,000 during October. In other words, the Obama administration would have us believe that nearly a million people “disappeared” from the U.S. labor force in a single month.

#6 The number of Americans “not in the labor force” has grown by more than 11 million since Barack Obama first entered the White House.

#7 In October, the U.S. labor force participation rate fell from 63.2 percent to 62.8 percent. It is now the lowest that it has been since 1978. Below is a chart which shows how the labor force participation rate has been steadily declining since the year 2000. How can the economy be “healthy” if the percentage of Americans that are participating in the labor force is continually declining?…

#8 If the labor force participation rate was still at the same level it was at when Barack Obama was elected in 2008, the official unemployment rate would be about 11 percent right now.

#9 Even if you are working, that does not mean that you are able to take care of yourself and your family without any help. In fact, approximately one out of every four part-time workers in America is living below the poverty line.

#10 In January 2000, there were 75 million working age Americans that did not have a job. Today, there are 102 million working age Americans that do not have a job.

Bill December 17, 2013 at 9:07 pm

Since you are in Israel at the moment, you can probably answer the question of whether a warm climate has hindered your own or the Israelis output.

I think not.

Mark Thorson December 17, 2013 at 10:37 pm

It gets plenty cold in Israel sometimes. Like now.

http://www.ynetnews.com/articles/0,7340,L-4465627,00.html

Anti-ummmmm December 17, 2013 at 9:13 pm

According to a recent survey by the Pew Research Center, just 33% of Americans think their children will have a better life than they did. On the other hand, 62% believe their children will be worse off.

The typical American family has seen its real income (adjusted for inflation) fall for 5 consecutive years now, and it earns less in real terms that it did in 1989.

According to the Census Bureau, median household income fell in 2012, and it languishes 8.3% below the pre-crisis peak in 2007.

The Brookings Institution, meanwhile, calculates that real incomes for working-age men in the US have fallen by 19 per cent since 1970.

(Of course, if you’re fortunate enough to be a member of the super-rich who, thanks in large part to central bankers driving up asset prices, saw their real incomes rocket by 20% in 2012.)

In Europe things look even more dire. Just 28% of Germans think their children will be better off than they were. In the UK it’s 17%, in Italy 14%, and in France just 9%.

In Britain, research by the Financial Times shows that those born in 1985 are the first cohort to suffer a living standard worse than those born 10 years before them.

Contrast this gloomy picture with China, where 82% think their kids will have it better than they did. In Nigeria, the number is 65%. In India, 59%.

It’s blatantly obvious that the West is in decline. And most people seem to understand this.

But this isn’t a bad news story. Wealth and power has constantly shifted throughout history. Five hundred years ago, it was the West that was rising and Asia in decline. Today it’s the exact opposite.

As Jim Rogers has said so many times before, if you were smart in the 1700s, you went to France. If you were smart in the 1800s, you went to England. And in the 1900s, you went to the US.

Today, it’s the developing world. That’s where the long-term opportunity is – Asia, Africa, and South America.

What’s happening in the developing world is nothing short of remarkable. One billion people are being pulled from the depths of poverty into the middle class… bringing with them untold possibilities for business, employment, and investment.

If you have children, this is a great direction to influence them. Encourage them to learn another language, travel, and apply what they want to do to how the world is going to be in the future.

Mr. Econotarian December 18, 2013 at 2:43 am

My kids have iPads and access to the World Wide Web – they already have it better than I did! When I was born, the technology to conceive my kids and get them born safely did not even exist, they would not be here at all and my wife would likely be dead.

Also as Greg Mankiw points out, from 1979 to 2007, median real income as measured by pre-tax, pre-transfer cash income of tax units rose by only 3.2 percent. If we look at households rather than tax units, that meager 3.2 percent rises to a bit more respectable 12.5 percent. If we add in government transfer payments, 12.5 percent number becomes an even better 15.2 percent. Factoring the middle class tax cut in, the 15.2 percent figure rises to 20.2 percent. Adjusting for household size decreases that 20.2 percent to 29.3 percent. Adding an estimate of employer provided health insurance into income raises the 29.3 percent figure to 36.7 percent.

Jay December 18, 2013 at 7:28 am

You didn’t pay much attention to the Black Friday surveys and the actual data this year.

According to surveys people said they would spend less money this year than last year the week of Black Friday. Turns out they spent more this year than they did last year. You have to remember surveys are only as useful as the people answering the questions and how well the question is asked. Go over to HuffPo, Slate, etc and you will quickly realize people are stupid and you probably shouldn’t trust their opinions. Even in aggregate their stupidity is biased so there is no self-correcting mechanism for sheeple that are drinking the same kool-aid.

anthony December 17, 2013 at 11:29 pm

For practical, personal reasons I would like to disinvent the cell phone. For political reasons, air conditioning. A curse be upon you, Willis Carrier, “Father of Air Conditioning.”

TMC December 18, 2013 at 12:01 pm

Yep, Congress used to take longer breaks when DC was a sweatbox.
I’m against anything that allows them to work more.

Axa December 18, 2013 at 5:54 am

Interesting from the economics point of view but a somehow a fail from geography point of view. Elevation above sea level is a major component of weather: Quito (Ecuador) maximum record temp is 30° C with average maximum of 23°C http://www.bbc.co.uk/weather/3652462 Even Munich have higher max temps at 48 degrees from Equator.

It would be interesting to do the very same analysis but using both latitude and elevation above sea level using economic output at regional level, not country level to see if the relationship still exists.

Jay December 18, 2013 at 7:14 am

I think it is pretty obvious. There is a correlation over time between global temperatures and global economic output. Ergo, rising global temperatures MUST BE THE PRIMARY CAUSE of increases in global economic output.

TMC December 18, 2013 at 12:04 pm

Well there are also clowns out there who think industrialisation and our successes are causing the earth to warm.
They even have a consensus that correlation is causation.

Marian Kechlibar December 18, 2013 at 9:18 am

I live in Prague, which has a relatively moderate climate, but the heat waves in the high summer can reach 36-37 degree Celsius. In such conditions, the city centre (mostly streets paved by stone) is unbearable, and if your apartment does not have air conditioning, the best that you can do is to lie around sweating; there is no chance to get anything mentally challenging completed.

Prior to the advent of air conditioning, the high summer would be a silly season. The middle class would retreat to the cottages in the countryside, where the heat would be less oppressive.

So yes, I can believe that a very hot climate (in absence of air conditioning) may be crippling to the economic output.

IVV December 18, 2013 at 12:06 pm

I think, though, that there is a combination of physiological and behavioral ideas that makes it easier to thrive in different temperatures for different populations. I’m a native Californian / half-Celt-half-Mexican (which itself is some unknown combination of Native Mexican and either Berber or Sephardic). My wife, on the other hand, is a Nordic German (from Germany). She can deal with the cold quite well, while I deal with the heat well.

There are behaviors that make it difficult for us to deal with the opposite extreme. My wife taught me everything I know about dressing for freezing temperatures. As far as I was concerned, well, people just wouldn’t live where it stays below freezing regularly, that’s just common sense. I’d be shivering and just would accept this because dangit, it’s just wrong to have things be this cold. Conversely, when it’s hot, I am constantly reminding my wife to change the way she dresses and to drink more water–gulp it down, don’t just sip it and let it sit for half an hour.

But on the other hand, our bodies naturally handle temperatures differently. Above 30C, her mind and body begin to shut down. She’s at regular risk of overheating, she quickly enters a mind fog, and her blood pressure drops. However, I’m still in full control of my faculties, and I only start to truly suffer at around 40C (Sometimes, not even then. I’ve had successful, cordial phone interviews at 42C. I’m sweating like mad, but able to stay fully engaged and technical). I used to regularly do yard work in 35C temperatures and do just fine. We’ve noticed that my skin temperature remains far cooler than hers in the heat, so much that she’s occasionally hugged me to keep cool. On the other hand, below 10C, I start becoming lethargic and depressed. I catch colds far more easily, and afterward I end up coughing for a month. Below 0C, my strength and stamina plunge, and the cold air is a horrendous shock to my system. My wife, however, remains strong, even invigorated. I may be nearly twice her size and much stronger normally, but she is far more capable at snow shoveling than I am.

Yes, there are definite behavioral challenges to surviving the heat or surviving the cold. However, based on my and my wife’s experiences, physiology definitely plays a strong role.

FC December 18, 2013 at 3:46 pm

Is leisure not an economic output?

gbz December 18, 2013 at 11:42 pm

Didn’t lee kuan yew at one time, long ago, suggest that air conditioning was the greatest economic equalizer? I know some indian and bangladeshi economists suggesting the same link between hot weather and lower economic output more than a few times. Didn’t know you could write a paper on it and get it published, unless you quantify the impact. Loss of productivity in hot weather is rather boringly obvious to anyone from the truly hot countries.

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