Many people are aware of the various consequences of climate change, including an increase in extreme weather events. But as temperatures change, there's going to be an added cost: People are less productive in extreme temperatures.
A new NBER working paper from Columbia's Geoffrey Heal and Harvard's Jisung Park finds that hotter-than-average years produce lower output per person in hotter-than-average countries, and higher output in colder-than-average countries, to the tune of 3% to 4% of GDP in both directions.
While they're hesitant to connect this directly with climate change, as it's an ongoing process, they note that this two-sided effect could have "serious political, economic, and philosophical consequences."
There's both the productivity drop off from extreme temperatures, and the fact that existing inequality between warmer (generally poorer) and colder (generally richer) countries could be increased.
Here's their chart showing the predicted effect on output of a year that's one-degree Celsius warmer than average, with countries representing each general temperature band:
Some of the negative effect likely comes from extreme weather events, decreased agricultural yield, rising sea level, and possible related disruption and violence.
However, the researchers say that the temperature and its physiological effects are likely responsible for some of the fluctuation in productivity, since the effects are much smaller in places like the United States where people can generally afford air conditioning and heating.
First, we know that higher temperatures make people perform worse on tasks and score lower on tests. When you add increased mortality and the reduced work hours of people whose jobs are directly affected by temperature, you get a significant drop off.
But more generally, test scores decline and task performance on just about everything goes down as temperature increases. The further you get from the general human comfort zone (about 64 to 72 degrees Fahrenheit) the more productivity falls. One of the several causes is that the brain has to spend more time getting rid of waste heat.
So a particularly hot year will amplify all of those problems.
This chart from a 2006 study shows the effect of temperature extremes on performance:
Warmer countries tend to have lower productivity and GDP in general, which has been backed by years of research and data. A 2009 paper from MIT economists found that hotter countries are, on average, 1.2% to 1.9% poorer with each degree of increased annual temperature. There's an optimal zone for human productivity, and it's between hot and cold extremes.
It makes sense that the individual effects of high temperature on productivity and consumption would add up, and that extremes would have a negative effect and be a large cause of that effect, which is exactly what the researchers found.
It's pretty self-evident that increasing incidents of extreme weather and rising sea levels will impact productivity, but the physiological effect of higher temperatures is just one of the hidden consequences of climate change.