Climatic Change

, Volume 148, Issue 4, pp 641–648 | Cite as

Interpreting nonlinear semi-elasticities in reduced-form climate damage estimation

  • Casey J. WichmanEmail author


Observed changes in weather can reveal marginal impacts of climate change on economic outcomes and the potential for adaptation. When modeling the nonlinear relationship between weather and changes in economic outcomes empirically, model choice can confound the interpretation of marginal and percentage effects and their respective confidence intervals. I present a simple solution for better characterizing semi-elasticities of nonlinear climate damages, and evaluate its relevance in interpreting empirical climate damages. For small marginal effects, the implications of this interpretation error is small; for larger effects, however, the misinterpretation error can be substantial.


  1. Barreca A, Clay K, Deschênes O, Greenstone M, Shapiro JS (2015) Convergence in adaptation to climate change: evidence from high temperatures and mortality, 1900–2004. Am Econ Rev 105(5):247–251CrossRefGoogle Scholar
  2. Barreca A, Clay K, Deschenes O, Greenstone M, Shapiro JS (2016) Adapting to climate change: the remarkable decline in the US temperature-mortality relationship over the twentieth century. J Polit Econ 124(1):105–159CrossRefGoogle Scholar
  3. Burke M, Emerick K (2016) Adaptation to climate change: evidence from US agriculture. Am Econ J Econ Pol 8(3):106–40CrossRefGoogle Scholar
  4. Burke M, Hsiang SM, Miguel E (2015) Global non-linear effect of temperature on economic production. Nature 527(7577):235–239CrossRefGoogle Scholar
  5. Carleton TA, Hsiang SM (2016) Social and economic impacts of climate. Science 353(6304)Google Scholar
  6. Chan NW, Wichman CJ (2017) The effects of climate on leisure demand: evidence from North America. Working Paper Version: December 5Google Scholar
  7. Dell M, Jones BF, Olken BA (2012) Temperature shocks and economic growth: evidence from the last half century. Am Econ J Macroecon 4(3):66–95CrossRefGoogle Scholar
  8. Dell M, Jones BF, Olken BA (2014) What do we learn from the weather? The new climate–economy literature. J Econ Lit 52(3):740–798CrossRefGoogle Scholar
  9. Deryugina T, Hsiang SM (2014) Does the environment still matter? Daily temperature and income in the United States. Technical Report, National Bureau of Economic ResearchGoogle Scholar
  10. Halvorsen R, Palmquist R (1980) The interpretation of dummy variables in semilogarithmic equations. Am Econ Rev 70(3):474–75Google Scholar
  11. Kennedy PE (1981) Estimation with correctly interpreted dummy variables in semilogarithmic equations. Am Econ Rev 71(4)Google Scholar
  12. Schlenker W, Roberts MJ (2006) Nonlinear effects of weather on corn yields. Appl Econ Perspect Policy 28(3):391–398Google Scholar
  13. Schlenker W, Roberts MJ (2009) Nonlinear temperature effects indicate severe damages to US crop yields under climate change. Proc Natl Acad Sci 106(37):15594–15598CrossRefGoogle Scholar
  14. van Garderen KJ, Shah C (2002) Exact interpretation of dummy variables in semilogarithmic equations. Econ J 5(1):149–159Google Scholar

Copyright information

© Springer Science+Business Media B.V., part of Springer Nature 2018

Authors and Affiliations

  1. 1.Resources for the FutureWashingtonUSA

Personalised recommendations