Roger Pielke Jr. explains that “insurance companies are making record profits off climate change panic, not facts.” Three slices:
Defenders of high premiums say it’s because it’s much more expensive to insure homes because of climate change.
But the recent spike in insurance prices is much more likely due, in significant part, to political requirements across the industry that financial companies consider “climate risk,” and the corresponding suite of risk modelers established to meet the newly created demand.
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These requirements resulted in the creation of a new cottage industry — “climate risk” vendors who promised the ability to produce computer models that accurately quantify the effects of climate change on extreme weather and risks of financial loss faced by individual properties.
Yet the science behind such bold promises has been called into question. For instance, one climate scientist warned, “A lot of these bold, hyperlocal claims are greatly outpacing the science.” A model vendor warned similarly, “It’s a Wild West right now.”
Such concerns have been validated by a new study of 13 different climate risk vendors undertaken by the Global Association of Risk Professionals (GARP) on behalf of the Climate Financial Risk Forum.
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Insurance companies have spent many decades estimating risk. Perhaps regulators should allow them to come to their own conclusions, rather than insisting they use dodgy science and charge customers even more.
Green’s piece elicited sharp rebuttals (and online follow-ups) from several economists and pundits, including AEI’s Scott Winship, Cato’s Jeremy Horpedahl, George Mason’s Tyler Cowen, substacker Noah Smith, and Reason’s Eric Boehm. And it collapsed under this scrutiny.
First, Green dramatically understated American incomes and wealth. Central to his thesis, for example, is that the median American family makes just $80,000 per year. Yet Horpedahl showed that this figure included single people and retirees, while the actual number for Green’s target demographic—married couples with children—was $132,959 last year. For the median American family with two earners, meanwhile, the 2024 figure was an even higher $142,200. Horpedahl thus concludes:
So already we can see that ~$140,000 is not some mythical number that is unattainable by American families. For the type of family Mr. Green is interested in, half of the families are already at this income level. True, that does mean that half are also below it, but the $80,000 figure he keeps using as a baseline isn’t anywhere near the right number. When he says things like “If one parent stays home, the income drops to $40,000 or $50,000” (from the supposed $80,000 baseline), he is drastically understating the financial situation of a typical family.
Art Carden correctly makes much of this central insight about the freedom to exchange claims to private property rights: “[economic] knowledge does not just exist ‘out there’ waiting to be found and analyzed. It emerges in exchange itself.”
While the outcome remains to be seen, two things are clear. First, if the Court upholds the tariffs, it will represent an unprecedented – and in my view unwise – blank check for the President to impose tariffs with no meaningful guardrails. Second, if the IEEPA tariffs are struck down, President Trump will almost certainly employ other tools at his disposal to impose other tariffs and continue to pressure other countries to negotiate deals to avoid such levies. Furthermore, although a decision striking down the tariffs would require the government to refund payments, it will likely make the process for seeking refunds slow and difficult – e.g. by requiring substantial documentation. Thus, going forward, consumers are unlikely to see lower prices across the board, and importers may still find their inputs facing tariffs, albeit under different legislative authority.
Disparate-impact theory allows a discrimination plaintiff to prevail based on statistical disparities in outcome, with no need to show an intent to discriminate. The theory appeared nowhere in the 1964 act, but the Justice Department grafted it onto Title VI, which prohibits discrimination by educational institutions and other recipients of federal money, via a 1966 regulation. The Equal Employment Opportunity Commission did the same for Title VII, which bars employment discrimination.
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The administration’s rescissions of disparate-impact regulations are laudable, but they won’t solve the constitutional problem. A successor could simply reinstate the regulations; and a few civil-rights laws, including Title VII, authorize such liability. The only long-term solution is litigation challenging disparate-impact liability on equal-protection grounds. Given the justices’ decision in Students for Fair Admission v. Harvard (2023) that racial preferences in college admissions violate equal protection, there’s reason to think a majority would be open to the argument that disparate-impact theory is unconstitutional. As Chief Justice John Roberts observed in another case, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.”
