Ben Olken, an associate professor of economics at the Massachusetts Institute of Technology, and his colleagues have come up with a study that compares a country’s temperature with its economic growth. The study, by economists at MIT, found that in years with higher temperatures, poor countries experienced significantly slower economic growth.
The research adds to an economic puzzle that dates back hundreds of years: Why do the poorer economies of the world tend to be in hot places, while the more successful economies are found in cooler climates?
The French writer Montesquieu wondered about it in the 1700s. Now there is significantly more data to work with. A graph of per-capita GDP and average temperature shows rich countries at one end — Norway, Germany, France and the U.S. — and poverty at the other end in Cambodia, Liberia and Congo. Many historian argue this is just the result of colonialism but Olken has taken the study even further and has researched warmer years within a country to see if there is any relationship to economic growth and the answer has been positive. The finding was that for poor countries, an increase in annual average temperature by 1 degree centigrade corresponded to a 1.1 percent drop in per-capita gross domestic product.
It’s “a huge effect,” Olken says. The difference between a country that’s in recession and one that is buzzing along amounts to a 3 percent shift in GDP. “So, 1 degree explaining a 1.1 percent shift is a huge effect of temperature.” Its unclear why this is so - whether the crop yields go down or that there are more disease but one theory is that in warmer temperatures we tend to become less productive.
“This stuff is not implausible,” Olken says, “If you look back at the U.S. before the advent of air conditioning, there were times when the federal government would shut down. It was too hot out.”
Researchers also have found that temperature shifts did not appear to affect the wealthier countries, perhaps because of air conditioning, or because they already are situated in cooler climates.
The results suggest that global warming could increase the gap between rich and poor. In summary this is a new study and some argue that its much too soon to reach such conclusions.
Do you think there is any validity for the relationship of temperature and our per-capita income?
Where does Saudi Arabia, Qatar, Dubai, Kuwait and other rich countries in the Middle East fit into this theory? I’m not entirely sure if I agree with this theory but it’s an interesting one nonetheless.