NYC Fed Endorses Hansen’s and Piazzesi’s “Contributions” to Climate Change Economics

On Friday, May 13, The NYC Fed will host the conference “Climate Change: Implications for Macroeconomics”.  Speakers include Lars Hansen of the University of Chicago, and Monika Piazzesi of Stanford University. These choices clearly show the Fed’s approach to research on these issues. If you like FRB/US you will love the approach to climate change research these macroeconomists advocate!

Piazzesi vs. Climate Change and Economics research

My experience with Piazzesi when she handled a JPE submission of a paper I wrote was reported in an earlier post. She said “It is nice to write papers for smart people but that is not what the readers and referees of JPE want.” This seems to be a common attitude, as reported in testimony to Congress in 2010 and Gabaix’ insult of macroeconomists at universities in the Midwest. I presume that she will follow her own mandate and not make a presentation aimed at “smart people”. This is probably a good idea because Richard Clarida argues that neither Columbia University graduate students nor Fed economists need the computational skills that really smart mathematicians have developed and would like to share with economists.

Piazzesi rejected our submission because she is a devoted disciple of calibration and I am not. Economists do not agree on the critical elasticities in any model, and we committed the unforgivable sin of examining the implications of the range of estimates that have been put forward by macroeconomists. This is called “Uncertainty Quantification” in the computational math literature. Considering a range of values for critical parameters is demanded in climate science. We wanted to write a paper that would be of interest to climate scientists, but that was not important to Piazzesi. I convinced Jim Heckman and JPE to reconsider the paper as a new submission, but this was so upsetting to Piazzesi that Heckman (out of fear of Piazzesi?) told me that if I reported Piazzesi’s devotion to the calibration religion, he would reject the paper no matter how good it was. One of her contributions to the study of climate change and economics was delaying the publication of “The Social Cost of Carbon with Economic and Climate Risks” by about three years and creating a situation where I felt I had to remove my name as an author in order for the paper to be evaluated fairly. 

Hansen vs. Climate Change and Economics research

That is old news. Today I want to focus on Lars Hansen and his “contributions” to climate change and economics. While he has written a couple of papers on climate change issues, his major contribution was killing my ability to do research on those topics. He was not completely successful, as is illustrated by the five papers on climate issues you can find at my website.

Here is the background.

UC and Argonne Invitations

In 2004, Profs. Hansen and Heckman invited me to join in a large NSF grant proposal that also involved computational mathematicians at Argonne. We did not receive any funding, but it lead to my teaching a course on numerical methods from 2004-2013 at UC economics and my involvement in many other projects that focused on improving the quality of numerical work in economics. The most visible effort were the ICE workshops ( which ran from 2005 through 2012.

I also worked with people at Argonne on developing a project on climate change, its economic impact and appropriate policy responses. This resulted in DOE funding of some projects at Argonne, but no funding for any of my research. In 2008 I was asked by Ian Foster, Distinguished Fellow at Argonne and director of Computation Institute, to participate in a proposal to the Macarthur Foundation. I represented both economic modeling and numerical methods among the three co-PIs (the third was Asst. Prof. Moyer, a geoscientist) on a MacArthur foundation grant for CIM-EARTH.

At the same time, Yongyang Cai was a PhD student here at Stanford in the iCME program. His thesis developed numerical methods for solving multidimensional dynamic programming problems of the kind that arise in economics. I continued to support him after he received his PhD because I was confident that the UC/Argonne effort would be funded and I wanted him to be involved as a post-doc.

In 2010, UC received a ~$6M, five-year grant to fund RDCEP, a followup to CIM-EARTH. I was a co-PI and NSF allocated funds to directly support me and hiring Yongyang Cai as my post-doc. One of my contributions to the project was bringing in economists who had interests in the problems that were to be tackled by RDCEP. Lars Hansen was one of the economists I invited. I ran Cai’s money through the NBER because his appointment would involve complex visa issues (he is from PRC) and, based on my conversations with UC about this, I decided I could not trust UC.

Battles with Non-Economists who had Non-Science Objectives

The project was in constant turmoil because of the hostile attitudes of the non-economists towards economics. These projects are supposed to connect with other projects. I suggested that CIM-EARTH contact the Shultz-Stephenson Task Force on Energy Policy here at Hoover. Moyer did not like that idea, saying that George Shultz was a “douchebag”. I defended Shultz in my reply. Assistant professors like Moyer often say impolitic things but Foster was a senior member of the leadership at Argonne National Labs and Director of the Computation Institute. In those roles, he represented Argonne and the University of Chicago. He ignored my defense of George Shultz and never allowed me to contact his group to discuss collaboration. This told me that the official attitude at Argonne and Chicago was that George Shultz (along with all Hoover Fellows) were considered “douchebags”. 

It was also clear that policy preferences were influencing RDCEP activities. People who I wanted to collaborate with were banned from RDCEP interactions because their work did not support the “green” agenda. Two of the UC geoscientists objected to the findings of the Copenhagen Consensus study on climate change policy, and said that the economists must be corrupt to participate in that project. On both occasions, I told them that Nancy Stokey was one of those economists. The response was “if the shoe fits….” Hansen knew about those attacks but never backed me up in defending those economists and climate scientists who did not conform with the policy views of Moyer and others in RDCEP.

Even though Hansen was one of the five co-PI’s, I was much more involved in RDCEP management and dealing with the attacks on economists. Occasionally I asked Hansen for help (in particular when Moyer was attacking Brock’s work), but he was much less active than I. Everyone knew that the primary reason for my being involved in RDCEP was that it would allow me to build serious dynamic economic models and apply them, in particular, to analyses of tax policy, also known as “dynamic scoring.” Hansen and I had occasionally chatted about moving this effort to BFI where there could be much more focus on economic policy issues.

That is the background leading up to Hansen’s actions against my research efforts in 2013.

Hansen and Foster Attack

In spring, 2013, Hansen was also unhappy with the environment in RDCEP. He asked me to have the Becker-Friedman Institute, of which he was the director, manage Cai’s NSF funding, taking it away from NBER (and, of course, getting the overhead that NBER was getting), and said BFI would give additional financial support for Cai and his work with me beyond the NSF funds I controlled. We agreed that this would allow Cai to focus more on work related to fiscal policy issues, and I liked the idea of increased support for this effort in general.

In August, 2013, I told Hansen that I wanted to reduce my involvement in RDCEP, particularly the managerial tasks. We did not talk about the details, leaving that for discussions in the fall when I would be at UC, but I assured both Foster and Hansen that I would remain an active researcher in RDCEP.

Soon after that, Foster and Hansen worked to destroy my collaborations at Chicago and Argonne. Foster told me that I had been dropped from the RDCEP project, a claim that surprised me since I had never resigned. He told the NSF the following:


Co-PI Ken Judd will be withdrawing from RDCEP citing constraints caused by affiliation with the group.

Judd’s resignation wlll not affect RDCEP In any substantive manner. The research that Judd has been performing will continue as we will retain Yongyang Cal (research professional associate, formerly postdoctoral scholar) who has been spearheading the work an dynamic models, working In particular with senior researchers Hertel, Sanstad, Brock and Co-PI Hansen. The PI (Foster) and other co-PIs (Hansen, Munson and Moyer) will assume Judd’s administrative responsibilities with respect to the award.


Foster and Hansen knew this was a false description of my plans. In particular, the comments about Cai’s role in RDCEP were clearly false, as everyone involved in RDCEP knew. I, not Yongyang Cai, had been spearheading the work on dynamic models in both CIM-EARTH and RDCEP. Yongyang Cai does excellent work but it was always under my direction. The claim that my “resignation will not affect RDCEP in any substantive manner” was a deliberate misrepresentation of my role in RDCEP. Anyone can come to their own judgment on this issue by going to the RDCEP website and examine the RDCEP work that I have co-authored, both before and after UC dropped me from RDCEP. Foster may have been correct in his prediction that my leaving would not affect RDCEP but that was only because I decided to continue my collaborations despite the actions of UC and Argonne.

It is also clear that Hansen knew about and supported Foster’s actions against me. Foster told me that he consulted with Hansen “on all issues” and that Hansen had agreed that “he would handle aspects of the project that relate to economics.” Surely the removal of the lead economist on the CIM-EARTH and RDCEP projects would be an issue that was related to economics. Hansen has never uttered one word of criticism of Foster’s message to the NSF nor has he denied approving it.

In November, 2013, I informed NSF that I had never resigned, and I informed Foster, Hansen, and others that I no longer had any plans on reducing my involvement in RDCEP. I should mention one unexpected event that changed my plans: in October, 2013, Hansen won the Nobel Prize. I knew that this meant he would not represent economists in RDCEP business. My leaving RDCEP would mean no economist in the RDCEP leadership.

Foster and Hansen did not care. After I informed NSF that Foster’s first email was false, he told the NSF that he had removed me from RDCEP, giving no reason. In the end, Hansen and Foster decided to remove me from RDCEP for NO reason

Hansen and BFI Take the Money, Refuse to Support Cai’s Work

Hansen and BFI did not honor Hansen’s promises. BFI handed control over Cai’s time to RDCEP people, cutting the time that Cai could spend on work with me by at least half. Hansen claims that BFI sent money to RDCEP for Cai’s support but I know the RDCEP budget and there is no evidence that any of that money went to support Cai. BFI also denied Cai (and, yes, me) critical resources. A major theme of both CIM-EARTH and RDCEP was introducing powerful, modern computational tools to economics. The CIM-EARTH project proposal to the MacArthur Foundation explicitly promised that high-power computers would be available for economics research. In the summer of 2014, Cai and I asked if we could have computer time on any University of Chicago or Argonne computer. Hansen and Foster, representing BFI and RDCEP, refused. Absolutely no computer time on any UC or Argonne computers, but I am sure they still collected all the overhead associated with Cai’s NSF funding. I was responsible for getting supercomputer time at Blue Waters to pursue RDCEP research even after Hansen and Foster dropped me from the project.

Some readers may doubt my claims. I informed the leadership of BFI in 2014 and 2015 about Hansen’s actions against my research funding. In the Summer of 2016, I sent the BFI Governing Council these criticisms of Hansen’s actions, along with supporting documents. No member of BFI leadership nor of the BFI Governing Council questioned any of my claims. They also made no criticisms of Hansen’s decisions as BFI Director.

Yongyang and I were able to finish some research projects but the hostile actions of Piazzesi, Hansen, BFI, Argonne Labs and others drastically reduced our output. A later post will describe some of the projects damaged by their opposition.

What’s Next for the Fed?

Now the Fed is looking to Piazzesi and Hansen to guide them in their considerations of climate change and economics. What could that lead to? It is the Fed so my guess is that we will soon see FRB/US-DICE, and they will claim to know the exact values of all the parameters.

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