The Hockey Schtick
"In my previous post, I summarized Robert S. Pindyck’s scathing paper on the computer models used by the Obama Administration for its estimates of the “social cost of carbon.” Pindyck’s critique is all the more compelling because he is a professor of economics and finance at MIT, with several decades’ experience publishing articles and books dealing with energy, and he is actually a proponent of a carbon tax. In the present article, I will explore a particular aspect of Pindyck’s critique that I skipped in the original post. Believe it or not, Pindyck explains that the allegedly state-of-the-art computer models that are now determining federal policy have damage functions that are literally made up. As I have been telling my economist colleagues for years, if they actually understood how these computer models were designed, they would have far less confidence in the “optimal carbon tax” numbers shooting out of the other end."
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