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Abstract
We study a simple model of economic growth where society’s preferences are a function
of consumption per capita and climate quality; and the specification of the climate
dynamics is inspired by recent work in climate science. The model is estimated to establish
a reference model and we develop a new method that determines the reasonable
size of a set of surrounding models which are difficult to distinguish from the reference
model. We show that robust agents who deny the effects of climate change on the
economy, behave more like agents who believe climate changes are real. This happens
because robust non-believers design policies that hedge against their worst case model
which does include an anthropogenic effect of their emissions on climate and these
changes in climate have negative effects on preferences and productivity.