Thank you very much to cole_haus for doing this. I definitely value it when people take the time to challenge analysis done by others.
As I understand it, the original analysis done by HaukeHillebrandt was correct.
Here’s my understanding:
In his earlier post, HaukeHillebrandt set out a calculation for the ratio of the impactfulness of climate change interventions versus GiveDirectly, which can be found in this spreadsheet.
This spreadsheet included a (potentially somewhat confusingly labelled) row called “Social cost of carbon per tonne (relative to cash transfers)”
The analysis done here by cole_haus is, as I understand it, based on the assumption that we need to take the social cost of carbon and apply an income adjustment to it
However, I don’t believe that this is necessary—I believe that the existing social cost of carbon figures are already on a consistent basis and don’t need to be adjusted further
What’s more, the original spreadsheet doesn’t seem to have actually been doing this (although it looked it did). To see this, take a look at this copy of the spreadsheet that I created. I created a new tab called ” SJ CC v GD ” which recreates the original calcs, but shows that there is no income adjustment to the social cost of carbon.
Happy to have my understanding corrected if I’ve misunderstood.
I believe that the existing social cost of carbon figures are already on a consistent basis and don’t need to be adjusted further
Yes, I think this is the crux of the disagreement as I mentioned in a comment on the original post. Why do you believe they are already on a consistent (i.e. income-adjusted) basis? I couldn’t find any evidence of this. I explain my thinking on this in the “Which interpretation to prefer?” section.
(Also, which consistent basis do you think the social costs of carbon are expressed in? I understand the updated GDvCC model as supposing they’re expressed in American-median-income dollars. Is that also your understanding?)
Also, I’m not sure I follow your claim that no income adjustment is happening in the GDvCC model. Even your new tab has a row labelled “income adjustment” with the number 1260 which is consequential in the final result.
Thank you for your reply, and sorry that my reply is rushed.
Re: ” Also, I’m not sure I follow your claim that no income adjustment is happening in the GDvCC model. Even your new tab has a row labelled “income adjustment” with the number 1260 which is consequential in the final result ” my claim isn’t meant to be that there is no income adjustment, but rather that there is no income adjustment to the SCC figures—there is income adjustment to the cash transfer figures. (Sorry, can’t remember how I phrased this before, so might not have been clear)
Ah, okay. Yeah, since we’re ultimately looking at the ratio between GiveDirectly and climate change interventions we can view the income adjustment as applying to either one:
And is it fair to say that if it applies to the GD impact, then applying it differentially across countries no longer makes sense? (i.e. Hauke’s original approach does make sense after all?)
I agree that using a single factor for income adjustment and viewing it as a GiveDirectly adjustment only makes sense on Hauke’s approach. But I still think the assumptions that license this approach (i.e. that the social costs of carbon have already been income-adjusted) are wrong which is why I didn’t follow this approach in my model.
Thank you very much to cole_haus for doing this. I definitely value it when people take the time to challenge analysis done by others.
As I understand it, the original analysis done by HaukeHillebrandt was correct.
Here’s my understanding:
In his earlier post, HaukeHillebrandt set out a calculation for the ratio of the impactfulness of climate change interventions versus GiveDirectly, which can be found in this spreadsheet.
This spreadsheet included a (potentially somewhat confusingly labelled) row called “Social cost of carbon per tonne (relative to cash transfers)”
The analysis done here by cole_haus is, as I understand it, based on the assumption that we need to take the social cost of carbon and apply an income adjustment to it
However, I don’t believe that this is necessary—I believe that the existing social cost of carbon figures are already on a consistent basis and don’t need to be adjusted further
What’s more, the original spreadsheet doesn’t seem to have actually been doing this (although it looked it did). To see this, take a look at this copy of the spreadsheet that I created. I created a new tab called ” SJ CC v GD ” which recreates the original calcs, but shows that there is no income adjustment to the social cost of carbon.
Happy to have my understanding corrected if I’ve misunderstood.
Yes, I think this is the crux of the disagreement as I mentioned in a comment on the original post. Why do you believe they are already on a consistent (i.e. income-adjusted) basis? I couldn’t find any evidence of this. I explain my thinking on this in the “Which interpretation to prefer?” section.
(Also, which consistent basis do you think the social costs of carbon are expressed in? I understand the updated GDvCC model as supposing they’re expressed in American-median-income dollars. Is that also your understanding?)
Also, I’m not sure I follow your claim that no income adjustment is happening in the GDvCC model. Even your new tab has a row labelled “income adjustment” with the number 1260 which is consequential in the final result.
Thank you for your reply, and sorry that my reply is rushed.
Re: ” Also, I’m not sure I follow your claim that no income adjustment is happening in the GDvCC model. Even your new tab has a row labelled “income adjustment” with the number 1260 which is consequential in the final result ” my claim isn’t meant to be that there is no income adjustment, but rather that there is no income adjustment to the SCC figures—there is income adjustment to the cash transfer figures. (Sorry, can’t remember how I phrased this before, so might not have been clear)
Ah, okay. Yeah, since we’re ultimately looking at the ratio between GiveDirectly and climate change interventions we can view the income adjustment as applying to either one:
GD impact⋅income adjustmentCC impact=GD impactCC impactincome adjustment.
And is it fair to say that if it applies to the GD impact, then applying it differentially across countries no longer makes sense? (i.e. Hauke’s original approach does make sense after all?)
I agree that using a single factor for income adjustment and viewing it as a GiveDirectly adjustment only makes sense on Hauke’s approach. But I still think the assumptions that license this approach (i.e. that the social costs of carbon have already been income-adjusted) are wrong which is why I didn’t follow this approach in my model.