wbinzhe
commented
3 years ago @wbinzhe FYI: This is how I think about the motivation of this paper (the real estate part hasn't been discussed yet). We can talk about these in more detail tomorrow.
Numerous earlier studies have documented a negative impact of rising temperature on overall economic activities (Dell et al. 2014; Burke et al. 2015; Hsiang et al. 2017). However, these macro-level analyses tend to mask substantial heterogeneity in economic damage. For instance, economic loss from rising temperature is concentrated in poorer countries (Dell et al. 2012). Recent works also find that there is no evidence of sales or productivity loss from the heat among the US establishments (Addoum et al. 2020). These results are of stark contrast to the agricultural sector, for instance, which is expected to experience severe heat damage (Schlenker and Roberts 2009). Taken together, earlier findings indicate that an effective adaptation such as air conditioning could significantly reduce the economic toll of climate change. Therefore, understanding if and how economic agents adapt to the new climate condition is of first order importance for any climate policy, but we have very limited evidence about how economic agents, in particular firms, are adapting (Linnenluecke et al. 2013). Poor understanding of adaptation margins imposes a challenge in designing better climate policies as the cost and benefit of adaptation critically determines the cost of climate change.
Part of the reason behind the lack of evidence on industry adaptation is that it is not easy to observe responses by firms. For instance, finding data on detailed pricing, stocking, and production decisions is extremely challenging in many settings. In this paper, we overcome these limitations by focusing on the retail sector. By leveraging Nielsen sales data, we document if rising temperature is negatively affecting business outcomes such as sales. Further, by exploring pricing decisions and shelf-item choices, we study how these firms respond to negative environmental shocks in a detail. In addition to lending insights to industry adaptation responses in general, understanding the retail industry is important in its own right as it is the largest private-sector employer with more than one in four U.S. jobs (52 million jobs) and 19% of the U.S. economy ($3.9 trillion) (PWC 2020).
The findings of this paper will be one of the first evidence on (1) the magnitude of the economic cost of rising temperature on firms and (2) how firms are adapting to minimize the impact of those environmental shocks.
Thanks Seunghoon. This would work perfectly for our Neilson application.
- For RCA, we have to include real estate component. Let's discuss soon.
- Will we know "shelf-item choices"? We only know sales, right?
shoonlee
@wbinzhe FYI: This is how I think about the motivation of this paper (the real estate part hasn't been discussed yet). We can talk about these in more detail tomorrow.
Numerous earlier studies have documented a negative impact of rising temperature on overall economic activities (Dell et al. 2014; Burke et al. 2015; Hsiang et al. 2017). However, these macro-level analyses tend to mask substantial heterogeneity in economic damage. For instance, economic loss from rising temperature is concentrated in poorer countries (Dell et al. 2012). Recent works also find that there is no evidence of sales or productivity loss from the heat among the US establishments (Addoum et al. 2020). These results are of stark contrast to the agricultural sector, for instance, which is expected to experience severe heat damage (Schlenker and Roberts 2009). Taken together, earlier findings indicate that an effective adaptation such as air conditioning could significantly reduce the economic toll of climate change. Therefore, understanding if and how economic agents adapt to the new climate condition is of first order importance for any climate policy, but we have very limited evidence about how economic agents, in particular firms, are adapting (Linnenluecke et al. 2013). Poor understanding of adaptation margins imposes a challenge in designing better climate policies as the cost and benefit of adaptation critically determines the cost of climate change.
Part of the reason behind the lack of evidence on industry adaptation is that it is not easy to observe responses by firms. For instance, finding data on detailed pricing, stocking, and production decisions is extremely challenging in many settings. In this paper, we overcome these limitations by focusing on the retail sector. By leveraging Nielsen sales data, we document if rising temperature is negatively affecting business outcomes such as sales. Further, by exploring pricing decisions and shelf-item choices, we study how these firms respond to negative environmental shocks in a detail. In addition to lending insights to industry adaptation responses in general, understanding the retail industry is important in its own right as it is the largest private-sector employer with more than one in four U.S. jobs (52 million jobs) and 19% of the U.S. economy ($3.9 trillion) (PWC 2020).
The findings of this paper will be one of the first evidence on (1) the magnitude of the economic cost of rising temperature on firms and (2) how firms are adapting to minimize the impact of those environmental shocks.