Matthew Neidell on Climate, Human Capital and Adaptation

Speaker:  Matthew Neidell - Columbia University
  Monday, February 25, 2013 at 12:30 PM Aula C, Palazzo di Economia

 We provide the first estimates of the potential impact of climate change on human capital, focusing on the impacts from both short-run weather and long-run climate. Exploiting the longitudinal structure of the NLSY79 and random fluctuations in weather across interviews to estimate well-identified models of the effect of temperature, we find that short- run changes in temperature lead to statistically significant decreases in cognitive performance on math (but not reading) beyond 26C (78.8F). Turning to the long-run effect of climate, we estimate cross-sectional models and exploit the richness of the NLSY79 to control for numerous background factors, including the mother's and grandparents' human capital. We do not find a statistically significant relationship between climate and human capital, suggesting that adaptation plays a significant role over longer time periods. When we directly examine the effect of air conditioning as a form of adaptation, we find that, consistent with short-run results, climate is significantly related to math (but not reading) human capital. The adoption of air conditioning effectively offsets the penalty from 4.5C (8.1F) additional degree days above 21C, though we present some suggestive evidence on the limits of air conditioning as a protective measure in very warm climates. 

Programme Director
Marcella Veronesi

Publication date
November 20, 2012