Tag Archives: forecasts

What happens to the losers of the public debate about climate change?

Summary: Liberals believed that 2017 would mark a new start for US public policy to manage climate change. Now Conservatives agree, in a different sense. Both are wrong. The weather will determine who will win. The stakes for both sides are large (as are the possible effects on the world). The consequences for the losers will be severe. Just as we are unprepared for climate change (even repeat of past extreme weather), both sides are unprepared for defeat. This is an update and expansion of a post from March.

Cover of "Turning the Tide On Climate Change" by Robert Kandel

Cover of “Turning the Tide On Climate Change” by Robert Kandel (2009).

“The future is not what is coming at us, but what we are headed for.”
— Jean-Marie Guyau in Le Genèse de l’idée du temps, translated by Astragale.

The US public policy debate about climate has run for 28 years, from James Hansen’s famous Senate testimony to Trump’s threat to cut NASA’s climate research. This is one of the largest publicity campaigns in American history. Many people assume that US politics will determine the eventual winner, skeptics or alarmists. I disagree: the weather will determine who wins the public policy debate.

So far the weather has sided with the skeptics, with little of the extreme weather activists predicted. No surge of hurricanes after Katrina (despite the predictions). No sign of the methane monster; little evidence that we have passed the long-predicted tipping points. So, despite the efforts of government agencies, academia, and many ngo’s, the public’s policy priorities have been unaffected (see yesterday’s post). As a result, activists are going thru the 5 stages of grief for their campaign.

Global surface temperatures, flattish for 14 years (except for the 2015-16 El Nino).
October 2016 shows the El Nino spike, but exaggerates the recent flatness.
Warming is concentrated in months of May, June, & July.

NOAA Global temperature anomalies: October

From NOAA. Temperature in October of each year. Reference period is the 20th century.

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To understand the jobs report, see the state of the economy

Summary: The economy is slowing — slowly. September’s weak employment growth fits in this picture.  To see how, look at the current state of the economy — the essential context necessary to make sense of the jobs number. Equally important, this also shows why we are so poorly informed about the economy.  For the scoop about the jobs numbers, see my post at Seeking Alpha.

Fast Snail

Slow growth: the consistent picture during the economic recovery

The average growth rate of real GDP during the seven cycles from 1958 to 2001 was 3.5%/year. GDP grew 1.6%/year during the 2001-2009 cycle (2.8%/yr during the expansion phase). During this expansion GDP grew only 2.1% SAAR (seasonally adjusted annual rate). The full cycle rate will include the recession that ends it pulling the average down even more.

Each of the squiggles on this graph produced excited news stories and research reports. Bulls announced the peaks marked the start of a boom. Bears announced the troughs marked the beginning of the End Times.

Growth of real GDP during the recovery

Looking ahead — on August 3 the Atlanta Fed’s GDPnow model forecast Q3 real GDP of 3.2%. The bulls were euphoric, predicting that the Fed would soon begin to raise rates back to “normal” levels.  Surprise! As the five or so previous episodes of good news, secular stagnation has struck back. The current forecast is 2.2%. It’s called regression to the mean.

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PollyVote gives a reliable forecast about the Election. Prepare for Hillary.

Summary: The polls dominate the election news, but there are better ways to forecasts of its results. Here is one of the best: aggregating the various forecasting models. The results gives us time to prepare for the Clinton administration. See below for links to posts describing what we’ll see.

Prediction: a landslide for Hillary Clinton in the Electoral College

Pollyvote - Electoral Count - 16 Sept 2016

From the PollyVote website

“The PollyVote is based on the principle of combining forecasts. That is, PollyVote combines forecasts from different forecasting methods, the so-called component methods, each of which relies on different data. The PollyVote forecast is calculated by following a two-step approach:

  1. Averaging forecasts within each component method.
  2. Averaging the resulting forecasts across component methods.

“In other words, we use equal weighting of all forecasts within each component method, then equal weighting across these forecasts from different methods. This is the same approach that the PollyVote successfully used to forecast U.S. presidential elections since 2004, and the 2013 German federal election.” {Read the rest here.}

“The PollyVote was launched in 2004 by forecasting expert J. Scott Armstrong and the political scientists Alfred Cuzán and Randy Jones. In 2007, Andreas Graefe joined the project. For more information about the team click here.”

Read about their track record and their publications about the PollyVote project. To learn more see their Frequently Asked Questions page. News stories about PollyVote data are automatically generated by software of the German-based company AX Semantics. Here’s how they do it…

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Nassim Nicholas Taleb warns us about climate change

Summary:  This is the second post looking at statistician Nassim Nicholas Taleb’s insights about “ruin” risks, and what they tell us about climate change. Here we look at his warning about climate change and two factors he ignores: the duration of the climate risk window and the odds of a climate disaster. The danger is real but the stories that we face certain doom are wild exaggerations, which make rational preparation more difficult. The previous post was Nassim Nicholas Taleb looks at the risks threatening humanity.

Cover of "Turning the Tide On Climate Change" by Robert Kandel

Cover of “Turning the Tide On Climate Change” by Robert Kandel (2009).

Yesterday’s post examined a methodology developed by a team including Nassim Nicholas Taleb for identifying “ruin” risks, where the result is non-recoverable for global civilization — or even the biosphere (described in “Mathematical Foundations for the Precautionary Principle“).

They wrote a note applying their method to one of the major risk debates of our time: “Climate models and precautionary measures” in Science and Technology, in press. The authors are brilliant, and it states with unusual clarity common arguments for radical and immediate action to fight climate change. Here’s the core of their analysis (it’s worth reading in full).

“Those who contend that models make accurate predictions argue for specific policies to stem the foreseen damaging effects; those who doubt their accuracy cite a lack of reliable evidence of harm to warrant policy action. These two alternatives are not exhaustive. One can sidestep the “skepticism” of those who question existing climate-models, by framing risk in the most straight-forward possible terms, at the global scale. That is, we should ask ‘what would the correct policy be if we had no reliable models?’

“We have only one planet. This fact radically constrains the kinds of risks that are appropriate to take at a large-scale. Even a risk with a very low probability becomes unacceptable when it affects all of us –– there is no reversing mistakes of that magnitude.

“…While some amount of pollution is inevitable, high quantities of any pollutant put us at a rapidly increasing risk of destabilizing the climate, a system that is integral to the biosphere. Ergo, we should build down CO2 emissions, even regardless of what climate-models tell us.

“…This leads to the following asymmetry in climate policy. The scale of the effect must be demonstrated tube large enough to have impact. Once this is shown, and it has been, the burden of proof of absence of harm icon those who would deny it.”

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Nassim Nicholas Taleb looks at the risks threatening humanity

Summary: How to deal with risks dominates our headlines, usually driven by single-interest groups that see only their favorite threat. Statistician Nassim Nicholas Taleb’s latest work offers a way to identify the most serious threats facing us, and determine how much we should spend to fight each of them. It has received much attention. Is it useful? Part one of two.

Clock hourglass

A series of papers by Nassim Nicholas Taleb et al made a large contribution to our understanding of risk: The Precautionary Principle within the statistical and probabilistic structure of “ruin” problems. The main paper is “The Precautionary Principle (with Application to the Genetic Modification of Organisms)“, well-worth reading for anyone interested in GMOs or risk analysis. I will not attempt to summarize it. I will point out one aspect of relevance to many of the key challenges of our time: how should policy-makers allocate funds to prevent or mitigate shockwave threats — potentially disastrous but of low or certain probabilities?

Excerpt: What is a “ruin” scenario, and how should we respond to them?

“We believe that the PP should be evoked only in extreme situations: when the potential harm is systemic (rather than localized) and the consequences can involve total irreversible ruin, such as the extinction of human beings or all life on the planet.

“A ruin problem is one where outcomes of risks have a non-zero probability of resulting in unrecoverable losses. …In biology, an example would be a species that has gone extinct. For nature, ‘ruin’ is ecocide: an irreversible termination of life at some scale, which could be planetwide.

“…Our concern is with public policy. …Policy makers have a responsibility to avoid catastrophic harm for society as a whole; the focus is on the aggregate, not at the level of single individuals, and on global-systemic, not idiosyncratic, harm. This is the domain of collective ‘ruin’ problems.

“…For example, for humanity global devastation cannot be measured on a scale in which harm is proportional to level of devastation. The harm due to complete destruction is not the same as 10 times the destruction of 1/10 of the system. As the percentage of destruction approaches 100%, the assessment of harm diverges to infinity (instead of converging to a particular number) due to the value placed on a future that ceases to exist.

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Good news from America about climate change, leading the way to success

Summary: Journalists live by the rule “if it bleeds, it leads”, sound business advice which buries important good news. Such as the new data from the EIA about US CO2 emissions. It’s another small step away from CAGW, especially the coal-driven RCP8.5 climate nightmare scenario. It’s one of many such during the past few years — with the potential for even better news in the future.

“This is not the end, it is not even the beginning of the end, but it is perhaps the end of the beginning.”
— Speech by Churchill on 10 November 1942 after a key defeat of the Africa Corps by Britain.

U.S. energy-related CO2 emissions in 2015 are 12% below their 2005 levels

US CO2 emissions

“Adjusted for inflation, the economy in 2015 was 15% larger than it was in 2005, but the U.S. energy intensities and carbon intensities have both declined. On a per-dollar of gross domestic product (GDP) basis, in 2015, the United States used 15% less energy per unit of GDP and produced 23% fewer energy-related CO2 emissions per unit of GDP, compared with the energy and emissions per dollar of GDP in 2005.”

The big driver of this change is the shift from coal to natural gas (per the EIA). Coal use peaked in 2008, and declined 32% by 2015 (per the EIA), resulting from the collapse in natural gas prices (fracking!) — predating any effects from the Clean Power Plan.

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Trump & Clinton ignore America’s too-slow economic growth. We can change that!

Summary: Slow economic growth is among the most serious problems afflicting America. It’s incontrovertible, expected to continue — with broad and ill effects. Too bad neither of our major candidates are interested in talking seriously about it. We can change that, if we make the effort.

An exaggeration, but it’s a serious problem

Economic Growth is over

From the Fed’s survey of Professional Forecasters

The economy bounced as expected in 2010, with economists’ dreams of a “V” shaped recovery. Then the economy went off the rails, but they remained confident. Quarter after quarter, economists forecast great growth several years out — then slowly reduced them, only to find that actual GDP comes in even below their predictions. Forecasts of the Fed’s staff show the same pattern.

The only change is that now neither expects any improvement during the next few years. Of course, neither forecasts a recession in the next few years.

In 2013 Paul Krugman and Larry Summers predicted that the US had lapsed into secular stagnation. It was controversial then. After three years the problem has become apparent to anyone paying attention.

Consensus prediction of professional forecasters in Q1 of each year & Q2 2016
Read from left to right, top to bottom. Actual GDPs are in bold red & italics

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