Market Expectations about Climate Change

How do economic agents update their beliefs about climate change?
While most studies have relied on indirect belief measures or opinion polls, in a recent paper Wolfram Schlenker and Charles Taylor analyze a direct measure: prices of financial products whose payouts are tied to future weather outcomes.
Comparing market expectations to climate model output and observed weather station data, they find that trends in weather markets follow climate model predictions and are not based on shorter-term variation in observed weather station data. When money is at stake, agents are accurately anticipating warming trends in line with the scientific consensus of climate models.

About the speaker

Wolfram Schlenker is a Professor at the School of International and Public Affairs (SIPA) and the Earth Institute at Columbia University, where is the co-director of the Center for Environmental Economics and Policy ( and the co-director of the Energy & Environment Concentration.  He is a Research Associate at the National Bureau of Economic Research (NBER). In spring 2020, he is the Alliance Visiting Professor at Ecole Polytechnique. He currently serves on the Board of Reviewing Editors at Science.
He has studied the effect of weather and climate on agricultural yields, how climate trends and the US biofuel mandate influences agricultural commodity prices, and how pollution impacts both agricultural yields and human morbidity.
He previously was an Associate Professor of Agricultural and Resource Economics at the University of California at Berkeley and an Assistant Professor of Economics at the University of California at San Diego.  He was the Cargill Visiting Scholar at Stanford University, Gilbert White Fellow at Resources for the Future, and Visiting Scholar at the Princeton Environmental Institute and Department of Economics. 
 He received a Master in Engineering and Management Science (Diplom in Wirtschaftsingenieurwesen) from the University of Karlsruhe in Germany, a Master of Environmental Management from Duke University, and a Ph.D. in Agricultural and Resource Economics from the University of California at Berkeley. 
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