Climate change and economics 101: Teaching the greatest market failure
This report analyses 27 introductory economics textbooks used in the US that cover micro and macroeconomics to assess their treatment of climate change. Authors find limited coverage in texts and that most texts relate climate change to the negative externality of carbon emissions. Market solutions such as cap-and-trade and carbon taxes are recommended.
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OVERVIEW
Representation of climate science
The analysis suggests that not all textbooks mention climate science. Additionally, a subset of the texts diverges from the scientific consensus on the human causes of climate change.
The externality framework
In all the texts, climate change is discussed as a problem of carbon emissions’ negative externalities. The preferred market-based solutions include emission trading and Pigouvian tax.
Other points of engagement
Some authors discuss climate change in terms of GDP accounting, economic growth, collective action problems, cost–benefit analysis, global inequality, and adaptation. However, only a few authors consider adaptation beyond mitigation.
Recommendations
To improve economics education on climate change, the authors recommend updating the textbooks to better reflect the latest research in climate change economics. They also suggest including climate change more broadly in addition to externality frameworks. Educators should focus on the connection between inequality and climate issues. Discussions of global mitigation efforts could consider different countries’ historical responsibility for carbon emissions, as well as the unequal burden borne by poor people in developing countries.
Conclusion
The report finds a narrow and limited focus on climate change across the 27 introductory economics textbooks examined. The authors suggest that more comprehensive and balanced treatment of this critical issue would better equip economics students to face the climate crisis.
