Normally, when we talk about the possible consequences of climate change, we talk about severe heat waves, or rising oceans, or increased droughts, or more wildfires. Disruptive natural disasters. But some recent research suggests that there's another, more subtle effect of a warming planet that could be even more economically significant. Higher temperatures appear to cause worker productivity to plummet.
In a 2010 PNAS paper, Solomon Hsiang studied countries in Central America and the Caribbean. He found that once the temperature gets up past 26°C (78°F), economic output in labor-intensive sectors of the economy starts falling. Specifically, output drops about 2.4 percent for every increase in degree Celsius. This was true of both agricultural and non-agricultural sectors. As Hsiang explained in a follow-up blog post, it appears that "people generally are less productive and tire faster when it's hot."
That makes intuitive sense. It's hard to work in the heat! But more evidence never hurts. A separate NBER paper published in 2011 by Joshua Zivin and Matthew Neidell found similar impacts in the United States. Once the temperature reached about 26°C, workers who were either outside or in environments sensitive to temperature (construction, say) worked about 1.8 percent less for every degree rise in Celsisus. Here's a graph showing how we get lazier in the heat:
And now we have a third data point. After last year's Fukushima disaster in Japan, the country shut off most of its nuclear reactors and businesses were forced to conserve electricity. Many offices decided to turn down the air conditioning. Workers slipped off their jackets and perspired their way through the day. This was a great natural experiment to see the effects of heat. Here's what happened, via the New York Times:
Unfortunately, studies by Shin-ichi Tanabe, a professor of architecture at Waseda University in Tokyo who has long been interested in “thermal comfort,” found that while workers tolerated dimmer light just fine, every degree rise in temperature above 25 Celsius (77 degrees Fahrenheit) resulted in a 2 percent drop in productivity. Over the course of the day that meant they accomplished 30 minutes less work, he said.
That's remarkably consistent with those earlier papers. The evidence keeps piling up that higher temperatures cause worker productivity to drop. So what happens if we keep heating up the planet? Surprisingly, this hasn't really been studied. As Hsiang has pointed out, economic models that try to assess the damage caused by climate change don't take this drop in labor productivity into account.
Some countries, of course, will be able to adapt. One 2008 study by three economists, led by Northwestern’s Benjamin Jones, found that it's mainly poorer nations that experience a big plunge in economic output during hotter-than-average years. They see a drop in industrial output and more political unrest. But wealthy countries are far more immune to the heat penalty.
One likely explanation is that air conditioning allows many workers in richer countries to shield themselves from the hotter weather. In an earlier post, we looked at how the U.S. economy became vastly more productive after the introduction of AC in the 1930s. The downside is that all that air conditioning uses a lot of energy — China and India are now burning trainload after trainload of coal to satisfy their growing cooling demands. What's more, the newer, ozone-friendly hydrofluorocarbon gases used for AC units are themselves potent greenhouse gases.
If that keeps up, it would mean a hotter planet overall. In the United States, forecasts show, 100°F days will become remarkably common over time if global carbon emissions keep rising at their current pace. Which means air-conditioning and other cooling methods will become increasingly important to protect the world economy from the productivity-sapping effects of heat. Without a technological fix — and there are few discussed here — that's a potentially vicious feedback cycle.