Sunday, November 05, 2006

Economics of the Weather

The authors of Freakonomics have an article in the New York Times Magazine describing recent research in how the weather affects economics. Two main ideas:
  • Rainfall seems to have a significant effect on violent crime, both because increased drought tends to lead to more civil war and because riots in cities are dampened by rainfall
  • Research by two economists estimates the global warming will cause an increase in agricultural profits and mortality rates by the end of the century

Any thoughts on this research? Any other ways you can think of applying weather in economics?

(Source: Freakonomics Blog)

8 comments:

Anonymous said...

I think that this research is really interesting and may expose some unconsidered variables causing social phenomenona such as violent crime rates. Logically, Dubner and Levitt’s findings make sense: lots of rain certainly “dampen[s] a rioter’s spirit.” Thus, in our search to explain why things happen, we can see lots of patterns, climate being just one of them. I think that weather can be applied to economics, namely the decisions people make, in many ways. This article made me think of a homework problem we had in Statistics in which we had to construct a time plot of civil unrest from 1968 to 1972 in 3 month increments. The trend on the graph certainly showed that there was a seasonal variation, with the highest counts of civil disorders being in the early spring/summer months where weather was the most mild. During these months, weather would be nice enough for protesters to stay outside for long periods of time in order to make their points. In addition, spring comes after a long fall/winter period in which dissenters could spend planning and their energy could build up during the bitter cold months, only to unleash itself in full force in the spring. There are also surprising statistics relating ice cream consumption to rape. At first these two elements seem completely unrelated, but, like the number of civil disturbances, ice cream consumption peaks in the spring/summer months. People are outside later because daylight is extended during these months and thus more violent crimes, such as rape, occur during these periods. The statistics are out there to back up these economists’ findings, so I definitely think that this topic and many others could be easily related to weather trends and may lead to some new insights into what affects the decisions we make everyday.

--Sarah O'Donohue

Andrew L said...

Weather is a fun thing to apply to economics, as, as Dubner and Levitt point out, it is completely uncontrolable by humans. Of course, there is no good weather, economically speaking. Rain keeps American rioters at bay, but destroys German crops. Lack of it causes African civil wars. Rising temperatures raise agricultural production, but also increase mortality rates. I think it would be interesting to examine what kind of weather would be ideal for different regions and industries.

Anonymous said...

I wonder what kind of research alludes to how global warming will affect agricultural porfits and mortality rates...but I suppose it is well thought out and makes sense. I don't know how much I belive the second tidbit but I definitely agree with the first one. I know that if I wanted to riot something, I definitely would not want to be stomping around in the rain and mud, but then again, maybe that is from a girl's perspective. Its funny how (like Andrew said), something like weather, which we cannot control can be realted to economics. I wonder if certain countries are more peaceful becuase of the temperal region in which they are located. I might have just made up a word but I think you get what I mean...
-Veronica

Anonymous said...

theres a one word answer that shows how weather affects economics-gas. we talked about it this year. during the winter, gas prices go down because less is used as far as cars go. People dont use as much a/c and less people drive with their windows down which decreases gas mileage. In the summer, gas prices go up because of increased temperatures and a/c use and because more people are driving i think. climate definitely affects economics. For home heating gas prices go up in the winter and constant through the summer since natural gas can be a fixed price. At least some people fix their gas rates but others dont. The temperature also affects the clothing industry. Nobody (except walker kids) wants to wear shorts in the winter so they obviously wont be sold. Firewood is another item that is dependent upon the weather.
-Austin Lintault

Anonymous said...

Itis funny to see that as mad as rioters may be with something, a little rain will keep them at bay. Perhaps it is somewhat like if your house is cold and there's a fly inside. The fly will move very slowly as much as it wants to escape. Nature has a lot of power over people. Whenever it snows (or even the word "snow" is mentioned) the entire population of Georgia rushes to the grocery store to buy out all of the milk, bread, and toilet paper. It is said that statistically when there is a full moon, more people are hospitalized. I don't know whether that is simply myth or the changes in tides or pressure or something affects it, but that could be another application of a change in economics by nature. Also, sunny days sell more outdoor concert tickets in a more obvious assertion, but the more intense fan will go whether it is rain or shine, which is kind of similar to price discrimination, except it's weather discrimination.
-Kate Vanderlip

Anonymous said...

The first point makes sense, but the second point does not. I don't see how warmer weather would lead to more profits in the agriculture business. If the warm weather leads to increased agricultural production in the pomegranate industry, then the supply curve for pomegranates would shift out to the right and price would go down. We also learned earlier that farmers only earn normal profits in the long run, because they are price takers. I don't really follow how global warming could make them stop being price takers, and make them earn more than their next best job alternative.
jacob hormes

Anonymous said...

I agree with Sarah that weather definitely affects what decisions people make economically, like more people buy ice cream on warm, sunny days than on cold, rainy days. And it makes a lot of sense that, according to the article, the main reason that rain seems to quell riots, assaults, and murders is because the spike in rye raises the price of beer, and without as many beer purchases, all of those things (riots, assaults, and murders) are kept under control better when people have more control over their decisions (i.e, not drunk). -Carrie

Anonymous said...

I just got home...i'm sorry
-wiles