Should you go to work during a heat wave? Your productivity suffers, and GDP tanks when it’s hot

As the European heat wave continues to ravage the continent, the death toll is mounting, and the economic costs are piling up. With temperatures soaring to record-breaking highs, cities like Paris, London, and Berlin are grinding to a halt, but the damage is not just limited to shuttered schools and crowded fountains. The economic impact of the heat wave is far-reaching, with experts warning that it could lead to a cumulative loss of $638 billion in GDP by 2030 for just four European countries – France, Italy, Germany, and Spain.

Background & Context

The current heat wave is not an isolated incident, but rather a symptom of a larger trend. Climate change is projected to lead to more frequent and intense heat waves, which will have a devastating impact on the economy. The relationship between heat and economic output has been known for centuries, with Aristotle and Singapore's founding Prime Minister Lee Kuan Yew noting the connection between air conditioning and economic growth.

The impact of heat on the economy is not limited to developed countries. Even in the United States, one of the most heavily air-conditioned countries in the world, hotter-than-average years have been shown to lead to lower-than-average learning and human capital accumulation among American students. This is reflected in PSAT scores, which have been found to be highly unequal in their effect.

Key Details

According to R. Jisung Park, a labor economist at the University of Pennsylvania's Wharton School, the effect of heat on the economy is multifaceted. "Heat affects everything from students taking important exams to workers," he said. "Industrial accidents. You name it." Park's research has shown that workers in both indoor and outdoor settings are between 5% and 45% more likely to experience a significant injury or accident on a day in the high 80s Fahrenheit or above.

The impact of heat on productivity is also significant. New York City public school students who take their high school exit exams on a 90-degree day are historically about 10% less likely to pass than they would be on a 65-degree day. This is a clear indication of how heat can have a devastating impact on the economy.

What Experts Say

According to Park, the most economically damaging heat is not the record-breaking kind but the gradual ones. "Heat gets a lot of attention when you see these 100-degree, record-breaking heat waves, as we just saw in Europe," he said. "But the data actually suggests that the bulk of the damage is actually being done in hidden ways during the less extreme events that." This is a critical point, as it highlights the need for policymakers to take a more nuanced approach to addressing the impact of heat on the economy.

Key Takeaways

• The current heat wave could lead to a cumulative loss of $638 billion in GDP by 2030 for just four European countries – France, Italy, Germany, and Spain.
• Workers in both indoor and outdoor settings are between 5% and 45% more likely to experience a significant injury or accident on a day in the high 80s Fahrenheit or above.
• New York City public school students who take their high school exit exams on a 90-degree day are historically about 10% less likely to pass than they would be on a 65-degree day.
• The impact of heat on productivity is significant, with hotter-than-average years leading to lower-than-average learning and human capital accumulation among American students.

What This Means For You

The impact of the heat wave on the economy is far-reaching, and it's not just limited to the four European countries mentioned earlier. As the world continues to grapple with the effects of climate change, it's essential to take a more nuanced approach to addressing the impact of heat on the economy. This means recognizing the hidden costs of a warming world and taking steps to mitigate them.

For individuals, this means being more aware of the impact of heat on their daily lives. Whether it's taking regular breaks to stay cool or adjusting their work schedule to avoid the hottest part of the day, there are steps that can be taken to minimize the impact of heat. Additionally, policymakers and employers need to take a more proactive approach to addressing the impact of heat on the economy, including implementing policies to reduce heat stress and providing support for workers who are affected by the heat.

Ultimately, the impact of the heat wave on the economy is a wake-up call for policymakers, employers, and individuals alike. It's time to take the impact of heat seriously and take steps to mitigate its effects. By doing so, we can create a more resilient economy that is better equipped to withstand the challenges of a warming world.