a column by Wolfram Schlenker and Charles Taylor for VOX: CEPR’s Policy Portal
Understanding beliefs about climate change is important, but most of the measures used in the literature are unreliable.
Instead, this column uses prices of financial products whose payouts are tied to future weather outcomes in the US.
These market expectations correlate well with climate model outputs between 2002 and 2018 and observed weather data across eight US cities, and show significant warming trends. When money is at stake, agents are accurately anticipating warming trends in line with the scientific consensus of climate models.
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