This spring marks the release of new editions of introductory economics textbooks, so it’s a good time to update our 2010 review of the treatment of climate change in economics textbooks. As in 2010, some hit the mark while others are wildly misleading, but we’re happy to say that there’s plenty of good news: about half of the books improved their treatment of climate change.
Especially noteworthy is Glenn Hubbard and Tony O’Brien’s Economics, 4th ed., which has jumped to the top of our list. (Our previous review gave the 3rd edition a C+, describing it as “a masterpiece vandalized by hooligans”.) As a political aside, it is worth noting that Glenn Hubbard and Greg Mankiw, whose textbook also received a top grade, are the two economists advising Mitt Romney.
Only one textbook received a worse grade this time around: Roger Miller’s Economics Today, 16th ed.Not coincidentally, it has also earned the coveted 2012 Ruffin and Gregory Award for the Worst Treatment of Climate Change in an Economics Textbook.
If you’d like to congratulate Professor Miller and/or encourage him to update his textbook—which is full of fallacies, including the astounding assertion that an 80% reduction in CO2 emissions by 2050 is “the official carbon emissions target of the U.S. government” (!)—he can be reached at [email protected]. (Please be polite, because that’s the best way to effect change.) You can also contact the senior acquisitions editor for economics at his publishing house, Noel Kamm Seibert ([email protected]), to encourage her to follow through on what she wrote us via email: “We take content very seriously here at Pearson; our books are carefully checked and accuracy reviewed, and I am unhappy that this coverage in Miller is not up to par. I’ve shared these notes with the author, who is working on the next edition, and I am sure we can improve this chapter.” (Please make sure to also congratulate her on the Hubbard and O’Brien text, which is published by the same company.)
PS. On a historical note, Paul Gregory is now aware that there is an award named after his textbook, which went out of print ten years ago after this hilarious email exchange about the book’s ridiculous treatment of climate change. He of course claims to be a victim of the “climate police”, but the truth is that his textbook now sells on Amazon.com for $3.78 because it included wildly inaccurate statements like “There are in fact very few climatologists in the United States, and the majority of them are skeptical of global warming.” We are delighted that most textbook authors are more open to constructive criticism than Professor Gregory was, and we invite authors to email us at [email protected] for free and confidential feedback on draft material related to climate change.
Grade: A (Grade for the previous edition: C +)
From the book:
The burning of fossil fuels generates carbon dioxide and other greenhouse gases that can increase global warming.
Note that a Pigovian tax eliminates deadweight loss and improves economic efficiency. This situation is the opposite of the one we saw in Chapter 4, in which we discussed how most taxes reduce consumer surplus and producer surplus and create a deadweight loss. In fact, one reason that economists support Pigovian taxes as a way to deal with negative externalities is that the government can use the revenues raised by Pigovian taxes to lower other taxes that reduce economic efficiency. For instance, the Canadian province of British Columbia has enacted a Pigovian tax on emissions of carbon dioxide and uses the revenue raised to reduce personal income taxes.
Over the centuries, global temperatures have gone through many long periods of warming and cooling. Nevertheless, many scientists are convinced that the recent warming is not part of the natural fluctuations in temperature but is instead due to the burning of fossil fuels, such as coal, natural gas, and petroleum. Burning these fuels releases carbon dioxide, which accumulates in the atmosphere as a “greenhouse gas.” Greenhouse gases cause some of the heat released from the earth to be reflected back, increasing temperatures. Annual emissions of carbon dioxide have increased from about 50 million metric tons of carbon in 1850 to 1,600 million metric tons in 1950 and to nearly 8,500 million metric tons in 2008.
Wow, this book is terrific. Chapter 5 (“Externalities, Environmental Policy, and Public Goods”) includes a NASA graph of temperatures since 1880; clear descriptions of global warming, its connection to fossil fuel emissions and its global significance; and solid descriptions of policy approaches including the BC carbon tax, the European cap-and-trade system, and more.
With a book this good it’s tempting to avoid nitpicks, but there are some relatively minor areas for improvement: the B.C. carbon tax reduces corporate income taxes as well as personal income taxes, the paragraph about how “according to some estimates global temperatures could increase by 3 degrees Fahrenheit or more during the next 100 years” needs some work, and the last paragraph quoted above would be stronger without the first sentence. But those are nitpicks in what is truly a terrific treatment of climate change.
From the book:
Climate scientists understand the basic mechanisms of global warming, but there is less agreement on the size and geographical distribution of the impacts of climate change. One area of uncertainty is the degree of warming associated with any given increase in greenhouse gasses in the atmosphere. For example, according to the Intergovernmental Panel on Climate Change (IPCC), the amount of additional warming associated with stabilizing CO2 concentrations at 550 parts per million (well below the business-as-usual level) could be anywhere from 1 to 3.5 degrees centigrade. The effects of any given amount of warming are also uncertain. For example, 2 degrees of additional warming could produce anywhere from 6 inches to as much as three feet of additional sea level rise. Another problem is that increases in the average global temperature do not produce uniform changes in climate. Temperatures tend to change more near the poles and less near the equator. Storm tracks, rainfall patterns, and other details of climate change are still harder to predict, even though exactly those details may be critical to calculating damages. Complex climate feedback loops cause especially great difficulties in forecasting climate change. For example, warming increases the release of methane from permafrost, which in turn causes additional warming, but warming also may increase cloud cover, which would reflect some solar energy back into space and slow warming.
This excerpt makes it clear that the author knows quite a lot about climate change issues, and in fact this book is the only one that gives the topic an entire chapter (Chapter 6, “The economics of climate change and environmental policy”). The treatment is excellent and includes discussions of climate impacts including applicable examples of market and nonmarket damages while acknowledging uncertainty, and policy options. It also covers ethics and politics in a way that helps reveal the author’s somewhat unusual status as a libertarian who is quite concerned about climate change. (See his blog and his book TANSTAAFL: A Libertarian Perspective on Environmental Policy, recently republished in a 40th anniversary edition.)
The book itself is also somewhat unusual. It is published by BVT (“the publisher of affordable textbooks”) and comes at a fraction of the price of the other textbooks in this review. The end-of-chapter problems are open-ended and invite full-paragraph answers rather than numerical or other quick responses. Like some of the other books in this review, it could use better citations; unlike any of the other books in this review, it could use a copyeditor to correct a number of obvious typos. (The author says these will be corrected before final publication, and that the final printed version will also have full-color graphics and other layout features that were missing from the text that we saw.) If you’re willing to accept these unusual aspects of the book, its treatment of climate change is hard to beat.
No new edition since the 2010 review.
No substantive relevant updates since the 2010 review, except that the New York Times op-ed piece that hammered home the advantages of a revenue-neutral tax shift in the previous edition (“One answer to global warming: A new tax”, 9/16/07) was replaced by a new op-ed piece (“A missed opportunity on climate change”, 8/9/09) that also gets the job done.
No substantive relevant updates since the 2010 review.
Grade: A – (Grade for the previous edition: A -)
From the book:
Environmental taxes are perhaps the most powerful tool societies have for forging economies that protect human and environmental health.
Scientists have demonstrated that the documented global warming of the past century, and especially in the past decade, is at least partly a consequence of human activities that have increased “greenhouse gases” in the atmosphere. Most climatologists agree that the carbon dioxide buildup from the burning of fossil fuels such as oil, natural gas, and coal is a prime contributor to this problem. Forecasts of future warming range from 1.8° to 6.3° Fahrenheit by the year 2100…
The Baumol and Blinder book is very strong, both on climate change and on pollution in general, and it’s no wonder: one of the authors wrote the environmental economics bible that countless grad students learned from while pursuing their PhDs. If you’re looking for a thorough treatment of pollution issues in general, this book is your best bet.
The 12th edition has been modestly updated from the 11th edition, notably in the valuable addition of excerpts from a New York Times article, “U.S. Study Projects How ‘Unequivocal Warming’ Will Change Americans’ Lives” which adds valuable input on the effects of possible climate change. But there are still some annoying lapses in the climate change section, e.g., “1.8° to 6.3° Fahrenheit” in the quote above should be “1.1° to 6.4° Celsius,” according to the Intergovernmental Panel on Climate Change (see Table 3.1 of their 2007 report). A lesser quibble is that the reference to “most climatologists” should be changed to “almost all climatologists” in order to more accurately represent the views of the climate science community.
Grade: A – (Grade for the previous edition: B)
From the book:
Carbon emissions associated with global warming are [a] by-product of increased industrialization… in 2004, 23 percent of the greenhouse gas emissions produced by China were created in the production of exports.
Clearly, the most significant and hotly debated issue of externalities is global warming. The 2007 Nobel Peace Prize was awarded to former Vice President Al Gore and the Intergovernmental Panel on Climate Change, a group of 2,500 researchers from 130 nations that issued a number of reports linking human activity to the recent rise of the average temperature on Earth. Although there is considerable disagreement, many people are convinced that strong measures must be taken to prevent major adverse consequences such as dramatically rising sea levels.
Global warming has become one of the most difficult environmental policy challenges of our time. The science is complex, the effects are long lasting, the nations involved are many, and the costs and benefits to different nations are highly varied… Substantial reductions of greenhouse gases are likely to be very expensive.
Chapter 16 (”Externalities, public goods, and social choice”) includes excellent material on climate change, which also comes up in a host of other chapters on topics ranging from capital markets to long-run growth to carbon tariffs and international trade.
Overall, the book is a pleasure to read and the material is mostly excellent. The new edition corrects some overstatements from the previous edition, but it also jettisons a key quote about how “[n]early all climate scientists today believe that much of Earth’s current warming has been caused by increases in the amount of greenhouse gases in the atmosphere, mostly from the burning of fossil fuels.” The new edition consequently fails to link climate change to specific human activities such as deforestation or the burning of fossil fuels.
The last paragraph excerpted above is also worth some rethinking. Saying that “[t]he science is complex” sounds an awful lot like saying that “the science is uncertain”, which is unfortunate. And the claim that “[s]ubstantial reductions of greenhouse gases are likely to be very expensive” depends on the policy, on whether you’re measuring costs in absolute terms or as a percentage of GDP, and on whether or not you’re considering the “major adverse consequences” of business-as-usual as part of the equation. (A fuller explanation of those consequences would also be beneficial.)
O’Sullivan, Sheffrin, and Perez, Economics: Principles, Applications, and Tools, 6th ed. (Prentice Hall, 2012)
Grade: A – (Grade for the previous edition: B)
From the book:
An ongoing environmental issue is how to respond to the problem of global warming caused by greenhouse gases. One approach is to tax carbon-based fuels…
The cost of producing electricity [from solar power] is a bit higher than the cost of electricity from coal-fired power plants, but if coal plants were required to pay a carbon tax—a tax based on the carbon they release into the atmosphere—solar energy would be price-competitive.
Many people believe that global warming will hurt economic development, but research shows that the effects are more complex… First, the effects of increases in temperature seem to be confined to poor countries. Rich countries do not suffer from increases in temperature… Second, some of the adverse effects from higher temperatures seem to work through international trade.
Chapter 31 (“External costs and environmental policy”) has a fine treatment of environmental economics that includes a carbon tax example and a discussion of the European Union cap-and-trade program. There are also interesting examples elsewhere in the book, e.g., sidebars on “the falling cost of solar power”, on switchgrass biofuels, and on global warming and economic growth.
One opportunity for significant improvement would be a stronger statement on climate science that delves into the causes and effects of climate change. The 5th edition cited a National Academy of Sciences report on climate change from 2001, which our review criticized for being out of date; the 6th edition took out the NAS reference, but didn’t replace it with anything. (The 2007 IPCC report would be a fine option.) A second opportunity for improvement appears in the material on global warming and growth. The sentence quoted above (“Many people believe that global warming will hurt economic development, but research shows that the effects are more complex…”) gives the strong impression that “many people” are wrong to believe that global warming will hurt economic development, but in fact the rest of the material in this section simply discusses some details about how global warming will hurt economic development. The sidebar would therefore be stronger if the authors deleted the clause “but research shows that the effects are more complex”.
Grade: A –
From the book:
Global warming may turn out to be the mother of all market failures. There is a growing scientific consensus that “without big changes in emission rates, global warming from the buildup of greenhouse gases is likely to lead to substantial, and largely irreversible, transformations of climate, ecosystems and coastlines later this century.”
The excerpt above paraphrases and quotes the 2007 Stern Review (named after economist Nicholas Stern), and indeed the 5-page section on climate change in Chapter 13 (“Public goods, externalities, and environmental economics”) draws heavily on the Stern Review. This is not ideal because the Stern Review has received plenty of criticism from other economists, but the author nonetheless does an excellent job of covering lots of the essential issues, including intergenerational equity, the cumulative nature of CO2 emissions, the public goods aspect of the problem, and (rare in economics books) a solid treatment of climate change impacts.
In addition to branching out from the Stern Review (which could be accomplished by shifting some focus to the IPCC), the author needs to correct some relatively minor mistakes: a reference to carbon dioxide and the 1969 Clean Air Act should be changed to carbon monoxide (and 1970), and a reference to the Chicago Climate Exchange should be changed because it closed in 2010. The author could also usefully expand the discussion of emissions taxes, which gets almost no ink and is overshadowed by analyses of cap-and-trade and the 2004 “wedges” paper by Socolow et al.
Grade: B + (Grade from previous edition: B)
From the book:
Global temperature and CO2 trends are starkly opposite to those of U. S. air pollution, as the figure shows. Scientists debate the contribution of human economic activity to these trends but most say it is the major source.
Chapter 16 (“Externalities”) starts with a pretty awesome sentence: “We burn huge quantities of fossil fuels—coal, natural gas, and oil—that cause acid rain and global warming.” But the text tends to confuse carbon emissions and local air pollutants before finally clearing matters up in a sidebar (“Global Temperature and CO2 Trends: The Greatest Market Failure?”) that references the Stern Review and has an excellent graph of global temperatures and atmospheric CO2 concentrations.
There’s also a sidebar (“Tax Versus Cap-and-Trade”) that includes some good but random bits of information, including the claim that “cap-and-trade systems for carbon emissions [do] the same thing as a carbon tax.” (This claim is correct, but then why is the sidebar called “Tax Versus Cap-and-Trade”?)
There are other odd bits as well, such as the claim that “Congress is considering cap-and-trade systems for carbon emissions” (not anymore it isn’t) and the following statement: “All economists agree that solving the global warming problem will require changes in the incentives that people face. The cost of carbon-emitting activities must rise and the cost of the search for new energy technologies must fall.” The first sentence here is great, and the first half of the second sentence is great too. But the last part gives the mistaken impression that economists agree that carbon tax revenue should be used to subsidize clean-energy R&D. This is not the case: raising the cost of carbon-emitting activities will by itself create incentives for firms to search for new technologies. Subsidizing clean-energy research could certainly help the development of new technologies, but many economists would argue that such subsidies are not needed and might even be harmful to society.
Recommended with reservations
Grade: C + (Grade for the previous edition: C)
From the book:
Growing atmospheric concentrations of carbon dioxide… are widely believed to be a principal contributor to global warming… According to recent estimates from [MIT], the median forecast is for a climb of 9°F by century’s end, in the absence of effective countermeasures. The same model estimates a 10 percent chance of temperature rising by more than 12°F. If that happened, the permafrost would melt, freeing vast quantities of methane into the atmosphere… [and so] we face a roughly 1 in 10 chance of global warming sufficient to extinguish much of life on Earth.
The Intergovernmental Panel on Climate Change estimated that [a] tax of $80 per ton of carbon emissions would be needed by 2030 to achieve climate stability by 2100. A tax that high would raise the price of gasoline by 70 cents a gallon. This figure was determined, however, before the arrival of the more pessimistic MIT estimates. So let’s assume a tax of $300 a ton, just to be safe… Portions of [the tax revenue] could help pay down debt and rebuild crumbling infrastructure, or reduce other taxes.
Chapter 13 (“The environment, health, and safety”) has a new section on “Climate change and carbon taxes” that—unfortunately—has significant problems with information sources and misinterpretation of those sources. Instead of using climate projections from the IPCC, the authors cite a 2009 MIT study that is now in the published literature but is by no means authoritative. That study suggests that the odds of end-of-century temperatures increasing by more than 12°F is about 5% (not the 10% stated in the first quote above) and it says nothing about the likelihood that warming will “extinguish much of life on Earth.”
Similarly, the paragraph on how the IPCC estimated that a “tax of $80 per ton [CO2] would be needed by 2030” to stabilize carbon concentrations by 2100 does not directly cite the IPCC. Instead, it cites a 2008 CBO study, which actually says (citing the IPCC) that a tax of “as much as $80 per ton of CO2 might be necessary.” Go back to the original source (pages 59-61 of the IPCC AR4 Synthesis Report) and you’ll find that “carbon prices rising to US$20-80” per ton CO2 by 2030 are consistent with stabilization by 2100, with more recent models “lower[ing] these price ranges to US$5-65” per ton CO2. All of this is distressingly sloppy.
Finally, it is worth noting that one of the authors has a penchant for talking about a carbon tax of $300 per ton CO2, “just to be safe”. A tax of this magnitude—the equivalent of almost $3 per gallon gasoline or $0.30 per kWh of coal-fired power—is not seriously discussed by anybody else as far as we know. (According to Nordhaus, the Stern Review implies “a carbon tax of around $300 per ton today”, but that’s per ton of carbon; to find the equivalent per ton of CO2, divide by 3.67 to get $82 per ton CO2.)
Grade: C +
No substantive relevant updates since the 2010 review.
Grade: C +
A 6th edition is on the way but is not currently available to us, so we have no update to our 2010 review.
Grade: C (Grade for the previous edition: C -)
From the book:
[B]urning coal generates substantial particulate and carbon dioxide emissions that can contribute to health problems and global warming.
[G]overnment agencies may establish costly pollution standards to attack the global-warming problem without knowing for certain whether pollution is the main cause of the problem.
Consider carbon dioxide… a colorless, odorless gas that many scientists consider to be a contributing cause of climate change, specifically global warming. To reduce CO2 emissions, the U.S. government might set a cap of 5 billions tons of CO2… which would be about 10 percent below 2009 emissions levels… This by itself improves efficiency, because the cap imposes scarcity… But the cap-and-trade scheme leads to even greater improvements in efficiency.
[M]any economists have concluded that a cap-and-trade system would not be the best way to curb CO2 emissions in the United States. They believe that there are simply too many sources of pollution to make monitoring either possible or cost-effective… So, instead, many economists favor a carbon tax [which] would reduce consumption and lessen the externalities associated with CO2 emissions. It would also be nearly impossible to evade, so that we would not have to worry about cheating.
There are a few brief comments sprinkled throughout the book that address climate change, but the only significant treatment is in a new sidebar in Chapter 5 (“Market failures: Public goods and externalities”). The discussion of climate science is very weak: the 1st quote above is good, but the 2nd quote is not, and in the 3rd quote “many scientists” should be changed to “almost all climate scientists”.
Unfortunately, the authors do not do any better in analyzing economic instruments. They claim that there have been monitoring problems with the EU cap-and-trade system, but we are not aware of any, and in any case carbon taxes have exactly the same monitoring problems because of the potential for tax evasion. (Instead of contrasting taxes and cap-and-trade, the book should be focusing on their similarities.) There are other small-ish mistakes, too—the SO2 trading system in the U.S. started in the 1990s, not the 1980s, and it did feature grandfathered permits—but we are happy to report that we can no longer say (as we did in the first edition of this textbook review) that the book contains “multiple errors that would make Wikipedia blush.” This time around Wikipedia would merely wince, and we have reason to believe that the authors will make further improvements in the next edition.
Grade: D +
No substantive relevant updates since the 2010 review. Hopefully the two new co-authors will improve this text for the next edition.
Grade: D –
No substantive relevant updates since the 2010 review.
Gwartney, Stroup, Sobel, and Macpherson,Economics: Private and Public Choice, 14th ed. (South-Western, 2013)
Despite the publisher’s claim that this book had been “completely updated”, there were no substantive relevant updates since the 2010 review. (For that matter, the material on climate change has not changed significantly since at least the 11th edition, published in 2006.) The only reason this book is not repeating as the winner of the Ruffin and Gregory Award for the Worst Treatment of Climate Change in an Economics Textbook is that another book has gotten substantially worse.
Miller, Economics Today: Updated Edition, 16th ed.(Prentice Hall, 2012)
Grade: F (Grade for the previous edition: D)
From the book:
[In] the 1970s, many news magazines ran cover stories about how the world was descending into a new ice age… Some climatologists speculated that the earth might be entering a full-blown 10,000-year ice age… Of course, today a contrary scientific consensus suggests that global warming is a more likely scenario… Political leaders convinced by this argument have proposed a wide range of policies aimed at reducing emissions of “greenhouse gases”, such as carbon dioxide, that may be contributing to a worldwide warming trend…
How much of your weekly wages are you willing to sacrifice to be used to reduce aggregate emissions of carbon dioxide, a gas that you exhale every time you breathe?
In recent years, certain scientific research has suggested that emissions of carbon dioxide, sulfur dioxide, and various other so-called greenhouse gases might be contributing to atmospheric warming. The result, some scientists fear, might be global climate changes harmful to people inhabiting various regions of the planet.
The official carbon emissions target of the U.S. government already calls for total U.S. carbon emissions to be reduced to 80 percent of 2010 levels by the year 2050. To attain this target, the carbon emissions of the typical U.S. resident in 2050 will have to fall to levels not observed since the eighteenth century, when many fewer colonial Americans burned wood to generate heat. In the world today, the only nations with per capita carbon emissions this low are some of the poorest, such as Belize, Haiti, Mauritius, and Somalia. Thus, costly investments in new energy technologies will be required to meet the official U.S. target while continuing to generate energy for a much larger—and growing—U.S. population. To reduce carbon emissions even further, greater expenses would have to be incurred.
This book is a disaster. Sulfur dioxide is not a greenhouse gas. There was no scientific consensus in the 1970s about global cooling. And an 80 percent reduction in CO2 by 2050 is not (not not not!!!) an “official carbon emissions target of the U.S. government.”
While we’re at it, let’s do some math: in 2008 per capita CO2 emissions in the U.S. were 4.90 metric tons of carbon per person, and between 2010 and 2050 the U.S. population is projected to grow from 310 to 439 million people, so achieving an 80% reduction in total emissions would require bringing per-capita emissions down to 0.69 metric tons of carbon per person. Now, Miller’s point is a decent one: data from the Oak Ridge National Laboratory shows that only poor countries have current carbon emissions that low. Nonetheless, comparisons with Egypt [0.70 metric tons of carbon per person] or Botswana [0.69] or even Brazil [0.56] would be more appropriate than comparisons with Haiti [0.07] or Somalia [0.02]. Similarly, combining population data and emissions data suggests that the U.S. had per-capita emissions of about 0.69 metric tons of carbon in 1870. Again, Miller’s point is a decent one, but comparisons with the eighteenth century (with U.S. per-capita emissions of about 0.01 metric tons of carbon) are factually incorrect.
As for scientific opinion from the 1970s, if you want actual research on this topic try Peterson et al., 2008, “The Myth of the 1970s Global Cooling Scientific Consensus”. But if you want unsubstantiated assertions, Miller can’t be beat. He gives no citations, but his “research_item” here is unlikely to be any better than George Will’s claim in the Washington Post (“Let cooler heads prevail”, April 2, 2006) that “Science magazine (Dec. 10, 1976) warned of “extensive Northern Hemisphere glaciation.” Go back to that article in Science (Hays et al., 1976, “Variations in the Earth’s Orbit: Pacemaker of the Ice Ages”) and you will find a statement (italics added) that “the long-term trend over the next 20,000 years is toward extensive Northern Hemisphere glaciation”, a forecast that is explicitly qualified with the note that “Such forecasts… apply only to the natural component of future climate trends—and not to such anthropogenic effects as those due to the burning of fossil fuels.”
Thanks to this nonsense, Miller wins the 2012 Ruffin and Gregory Award for the Worst Treatment of Climate Change in an Economics Textbook.
Yoram Bauman is a Sightline Fellow and has an economics PhD from the University of Washington. Dani Ladyka is a student at the University of Washington.
Full disclosure: Bauman is the co-author of the Cartoon Introduction of Economics, which is published by a sister company of Worth Publishers and is sometimes included in package deals with Worth textbooks.