Baylis, Patrick “Temperature and Temperament: Evidence from a Billion Tweets” (November 2015) | WP-265

What is the welfare cost of environmental stress? The change in amenity values resulting from temperature increases may be a substantial unaccounted-for cost of climate change. Because there is no explicit market for climate, prior work has relied on cross-sectional variation or survey data to identify this cost. This paper presents an alternative method of estimating preferences over nonmarket goods which accounts for unobserved cross-sectional and temporal variation and allows for precise estimates of nonlinear effects. Specifically, I create a rich dataset on hedonic state: a geographically and temporally dense collection of updates from the social media platform Twitter, scored using a set of both human- and machine-trained sentiment analysis algorithms. Using this dataset, I find limited evidence of temperature effects on hedonic state in low temperatures and strong evidence of a sharp decline in hedonic state above 70 degrees F. This finding is robust across all measures of hedonic state and to a variety of specifications.

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