Aversion to Extreme Temperatures, Climate Change, and Quality of Life

Type Working Paper
Title Aversion to Extreme Temperatures, Climate Change, and Quality of Life
Author(s)
Publication (Day/Month/Year) 2010
URL http://www-personal.umich.edu/~kelloggr/AlbouyGrafKelloggWolff_100219.pdf
Abstract
This paper uses hedonic methods and variation in wages and housing costs to estimate
households’ valuation of climate amenities. We find that, on the margin, households are willing
to pay more to reduce extreme heat than to reduce extreme cold. Combining these estimates with
“business as usual” climate forecasts for the United States, we find welfare losses in most areas
by 2100, with particularly large effects in California, southern states, and urban centers. On
average, the cost of hotter summers exceeds the gain from warmer winters by 2 to 3 percent of
income per year. These results account for taste heterogeneity and sorting; moreover, they are
not substantially attenuated by allowing for migration.

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