Nobel Prize Laureate William Nordhaus ’59 Discusses Economics of Climate Change

Dr. William Nordhaus ’59 P’85, ’87, ’91 won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for his work tying economics to climate change in 2018. Nordhaus, also a recipient of this year’s Andover Alumni Award of Distinction, discussed his studies during Unscheduled Time in the Freeman Room last Friday.

Nordhaus’s talk was part of the Climate Cafe speaker series, an initiative organized by the Oliver Wendell Holmes Library (OWHL) to raise awareness about climate change. According to Michael Barker, Director of Academy Research, Information, and Library Services, Nordhaus offered a valuable perspective for attendees.

Barker said, “All year, we’ve been having a conversation around climate change at the OWHL, usually Friday nights. When we heard Dr. Nordhaus was receiving the Alumni Award of Distinction, we thought it would fit in great with our program. It’s an honor to have a Nobel Prize winner among the speakers. Hopefully, it was a great opportunity for kids to hear somebody who’s really leading the thinking in his field.”

In his talk, Nordhaus shared that economics was the perfect way to pursue his desire to improve the living conditions of people around the world.

Nordhaus said, “Economics is about people’s living standards and how they live—what they can eat, what they can wear, where they can live, how they can be educated, and how they can be healthy. Not everyone has food, shelter, and healthcare, and I thought there was no higher calling than to try to bring the living standards of what we have closer to the rest of the world.”

After working at an Austrian research institution, Nordhaus realized that one way to achieve his goal was by considering the environment. In his studies, Nordhaus has pondered how to maintain economic progress without heavy consumption of nonrenewable energy.

“Today we have different major issues. We need to find ways to continue good economic growth, living standards, education, and healthcare without noxious byproducts. I had been working on that for a while, and I took a year off, and I went to a place in Austria, which was a research institute… Someone asked me about climate change. I said, ‘What’s that?’… He said, ‘Why don’t you put that together with economics?’ That sounded like an interesting challenge, so I said yes,” said Nordhaus.

Nordhaus explained that countries still rely on fossil fuels because governments have not implemented reforms to lower consumer interest. In order to address this reliance, Nordaus proposes raising prices to deter consumers from these resources.

“Everything we use [has] fossil fuels, but fossil fuels have no prices, so we just go about our daily business. We don’t care… The problem is we’re underpricing activities. We’re putting zero prices on the effects of emissions or we put a low price. We need a high price because when you put a high price on [something], the price of connected services, ones that are extremely carbon-intensive, will go way up,” said Nordhaus.

After listening to Nordhaus speak at All-School Meeting (ASM), Frank Zhou ’22 wanted to learn more about his work. Zhou was surprised that a topic as pressing as climate change was discussed several decades ago.

Zhou said, “I attended the event because Dr. Nordhaus had appeared [to be] an interesting person from his introduction in the ASM—a pioneer in his field with a plethora of accolades to back it up… Professor Nordhaus discussed two policy solutions to climate change, namely a cap on carbon emissions or a cap on trade. While I had heard both solutions before, the professor described his experiences of studying such solutions in the seventies. Perhaps that was my greatest takeaway. Climate change is a hot topic of today but did not go unnoticed in decades prior.”

Allison Guerette, Campus Sustainability Coordinator, oversees sustainable energy initiatives at Andover. Encouraged by the event’s turnout, Guerette hopes that Nordhaus’s talk inspired students to think about how climate change might impact their futures.

“We’re so grateful Dr. Nordhaus was willing to come to talk to students. As you can see, there was a huge response, and students were really excited to hear more from him… Dr. Nordhaus introduced a different perspective. Economics, government, and other professions all have to do with climate change and solving climate crises. I think it was great for students to hear that no matter what they do, it will probably be touched by climate change,” said Guerette.

Jasmine Ma ’23 attended the talk to learn more about how Nordhaus ended up in his line of work. His talk inspired Ma to further explore the relationship between economics and climate change.

“I felt like it would really be an honor to listen to such a distinguished alum talk about his experiences and his journey—discovering his passion for climate change and doing all the research that he does… I’ve always been interested in [economics and climate change], but I never knew for certain I wanted to study it in my future. I just wanted to explore my interests… and his talk was really inspiring. He was definitely very informative about all the research that he does,” said Ma.

Victor Tong ’22 is currently on the board of directors for a non-profit called The Canadian Youth Alliance for Climate Action, which focuses on connecting teens to elected officials regarding climate change. According to Tong, climate-change activism can manifest itself in both governmental and individual actions.

Tong said, “I attended the event because I was curious about how green technology development and environmentalism related to economics… The main takeaway I received was that we must hold our governments accountable for environmental policies because there are numerous policies that could be enacted that could control companies that emit. How I could reduce my own carbon footprint is through individual action like turning off unnecessary electronic appliances or by wasting less food and water.”