Transport, Energy and Climate Economics (TrEnCE) - Next session

Speaker: Jacob Moscona - MIT

Paper: With or Without U? Binning Bias and the Causal Effects of Temperature Shocks

Abstract: Estimates of climate impacts often show that extreme temperatures have large ef-fects on a range of outcomes. To document such non-linearities, many studies countdays in different temperature ranges, or “bins,” and consider how exposure to dis-tinct bins affects outcomes. We show that these non-linear approaches to measuringexposure to changing temperatures can generate spurious results. Specifically, globalwarming induces mechanical trends in extreme temperature exposure that correlatestrongly with a location’s baseline temperature. Substantial bias emerges if trendsin the outcome variable also correlate with baseline temperature for any reason.We demonstrate this problem, which we termbinning bias, theoretically, in simula-tions, and with real outcome variables. We then develop solutions. In applications,some results in the literature are unaffected by these corrections, while other resultschange substantially.

Relevant information :

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