A Comparison of DICE-2007 and the Simple Solow Model

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2023-04

Authors

Kapadia, Enayat

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Abstract

Climate change is one of the defining issues of the current day. Despite the ever-increasing number of resources dedicated to researching it though, there is a corresponding lack of public understanding of the issue, particularly among young people. The integrated assessment model, which combines economics and geophysics to quantify the damages caused by climate change, offers a potential remedy to this issue. Unfortunately, even the simplest integrated assessment model, William Nordhaus’s Dynamic Integrated Climate-Economy (DICE) model, is far too complex for undergraduate students to understand. Though largely untested, the Simple Solow Model (SSM) is a much simpler integrated assessment model that is based on the Solow model for growth, a basic economic concept taught at the undergraduate level. The objective of this paper is to quantify the level of similarity between the SSM and DICE; this will be done by performing sensitivity analysis on certain key parameters. Ultimately, the thesis will use this quantitative data to determine whether the SSM communicates the same ideas as DICE and what the implications of this comparison are for educators.

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