Stern exposed
Sep 4, 2012
Bishop Hill in Economics

Nicholas Stern is to blame.

When you see wind farms covering every hill and mountain and most of the valleys too, you can blame Stern. If you can't pay your heating bills, ask Stern why this has happened. When children are indoctrinated and dissenting voices crushed, it is at Nicholas Stern that you should point an accusing finger. When the lights start to go out in a few years time, it's Stern who will have to explain why.

Despite years of having mainstream economists pointing to the flaws in the Stern Review there has been an almost unanimous collective shrug from the media, more interested in climate porn than the wellbeing of their neighbours.

But perhaps the tide has turned. The GWPF has just published Peter Lilley's devastating critique of Stern's magnum opus and if this does not alert our policymakers to the confidence trick that has been pulled on them then we can reasonably assume that their ignorance is willful. Lilley's case is so overwhelming it's hard to know where to begin:

[Stern] succeeded in giving the clear impression that we face huge losses now which could be averted at a fifth of their cost. But this is achieved by verbal virtuosity combined with statistical sleight of hand. In fact, even on Stern’s figures, the cumulative costs of reducing greenhouse gases will exceed the cumulative benefits until beyond 2100. Stern’s misleading headlines rely on comparing apples and pears as well as conflating predictions centuries hence with the present.

The ethical values attributed to the perfectly rational decision maker imply that this relatively poor generation should be required to sacrifice up to 5% of their income to ensure that people in 2200, whose average incomes, even on Stern’s most pessimistic scenario, will be over 7 times higher than today’s, do not suffer a 5% loss of income. He castigates those who do not share this view as “not caring for future generations”.

Stern draws heavily on non-peer reviewed and alarmist literature to paint an exaggerated picture of the key risks of global warming.

A World Bank study shows that Stern’s forecasts of damage to infrastructure from more powerful storms are up to 100 times too large - being based on extrapolating a non-peer reviewed paper which attributed much of the growth of insurance claims to greater prevalence of more powerful storms. There is scant evidence of this.

Although the IPCC concludes that it is impossible to say whether the cost of preventing global warming would be more or less than the benefits of doing so, Stern claims the costs will be only a fifth to a twentieth of the benefits.

[H]is Review was an exercise not in evidence based policy making but in policy-based evidence making.

Richard Tol's foreword is hardly less sharply worded:

Sir Nicholas, now Lord Stern, was portrayed as an expert even though he had never published before on the economics of energy, environment or climate.

Nick Stern is, of course, free to use whatever discount rate he wants in his private life. Professor Sir Partha Dasgupta of Cambridge University has found that Stern should save 97.5% of his income, were Stern to follow the advice in the Stern Review.

The Stern Review was a tactical masterstroke, but it will likely prove to be a strategic blunder. Its academic value is zero.

[I'll post a link in the morning when it's live at GWPF]

Update on Sep 4, 2012 by Registered CommenterBishop Hill

Andrew Orlowski's take on Lilley's piece is here.

Update on Sep 4, 2012 by Registered CommenterBishop Hill

Chris Hope reckons he has found an error in the report.

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