Executive summary: The author argues that while economic modeling suggests global catastrophes like nuclear war would have severe and lasting impacts on prices, trade, and welfare, our current economic tools are fundamentally ill-suited to make reliable predictions about such scenarios, especially because they fail to handle tail risks, behavioral change, population loss, and systemic feedbacks.
Key points:
Claims about an area being “neglected” in catastrophe economics are hard to operationalize because existing models struggle with unprecedented, system-wide shocks.
A briefing by Article 36 suggests even a single 100 kT nuclear detonation could cause massive loss of life, destroy concentrated industries and infrastructure, severely strain public finances, and lead to uncertain recovery, but emphasizes large uncertainty in these estimates.
Historical recovery cases like post-war Japan and Germany may be poor comparison classes because modern nuclear weapons have yields orders of magnitude larger than those used in World War II.
Hochman et al. (2022) model food prices after a limited nuclear exchange and find a 10–12% global calorie reduction and short-term price spikes, but assume no direct destruction and continued global trade.
The author argues that general equilibrium models fail to capture catastrophic dynamics because they assume rational actors, ignore behavioral shifts and shock amplification, and typically rely on thin-tailed risk distributions.
Drawing on Weitzman (2009) and Stiglitz (2018), the post concludes that economic predictions after global catastrophes should be treated with skepticism until models better incorporate tail risks, feedbacks, population loss, and non-GDP outcomes.
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Executive summary: The author argues that while economic modeling suggests global catastrophes like nuclear war would have severe and lasting impacts on prices, trade, and welfare, our current economic tools are fundamentally ill-suited to make reliable predictions about such scenarios, especially because they fail to handle tail risks, behavioral change, population loss, and systemic feedbacks.
Key points:
Claims about an area being “neglected” in catastrophe economics are hard to operationalize because existing models struggle with unprecedented, system-wide shocks.
A briefing by Article 36 suggests even a single 100 kT nuclear detonation could cause massive loss of life, destroy concentrated industries and infrastructure, severely strain public finances, and lead to uncertain recovery, but emphasizes large uncertainty in these estimates.
Historical recovery cases like post-war Japan and Germany may be poor comparison classes because modern nuclear weapons have yields orders of magnitude larger than those used in World War II.
Hochman et al. (2022) model food prices after a limited nuclear exchange and find a 10–12% global calorie reduction and short-term price spikes, but assume no direct destruction and continued global trade.
The author argues that general equilibrium models fail to capture catastrophic dynamics because they assume rational actors, ignore behavioral shifts and shock amplification, and typically rely on thin-tailed risk distributions.
Drawing on Weitzman (2009) and Stiglitz (2018), the post concludes that economic predictions after global catastrophes should be treated with skepticism until models better incorporate tail risks, feedbacks, population loss, and non-GDP outcomes.
This comment was auto-generated by the EA Forum Team. Feel free to point out issues with this summary by replying to the comment, and contact us if you have feedback.