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Columnists: Hans Nilsson, Fourfact

Published on: 23 Oct 2018

It is better to be roughly right than precisely wrong

The quoted heading is attributed to John Maynard Keynes and comes to mind when seeing the debate that has emerged about the latest Nobel laureates in Economy William Nordhaus and Paul Romer.

Nordhaus has been accused of misleading the debate about climate change by underestimating the severity of the impact of the emissions and by overestimating the impact of carbon tax as the (only) measure to hold the emissions back. That might be so, but it could be that he was only “roughly right”. It should be remembered that his thoughts about market failures was introduced to a community where many of his fellow economists were “precisely wrong”.

Nordhaus at least made an attempt to make this particular market failure operational when many economists did not accept/observe any market failure of significance to deal with. He found that there was a role for government to play in order to correct the failure.

The debate about the shortcomings of Nordhaus has obscured the importance of the contributions of his fellow laureate Paul Romer. His research is targeted to how (and what sort of) technological knowledge is developed and spread in and among societies. On the question of emissions and climate change he has said: “…once we begin to produce [fewer] carbon emissions we’ll be surprised that it wasn’t as hard as it was anticipated.”

To many of us who are working with energy efficiency this is well known and what we are sharing with each other on eceee conferences and forums. We have seen it operationalised e.g. by use of learning curves and by research on multiple benefits.

So for Paul Romer it might be tempting to say that he is (almost) precisely right!

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Other columns by Hans Nilsson