Interview with Prof. Dr. Michael Funke, June 2011

Michael Funke has been a Professor for macroeconomics and applied econometrics at the Department of Economics of the University of Hamburg since 1995. A German translation is below.

Profile Picture Michael Funke

What have been the main steps in your professional life so far?
At the beginning of the 1990s I was appointed as a professor of economics in the newly founded Economics Department of the Humboldt-University in Berlin. Since the second half of the 1990s, I have held a chair for macroeconomics and applied econometrics in the Economics Department of the University of Hamburg. I am currently the chairman of the Standing Committee on Macroeconomics of the German Economics Association (“Verein für Socialpolitik”).

What is your main contribution to CliSAP?
The analysis of anthropogenic and natural climate change is confronted with large uncertainties that need to be taken into account to arrive at meaningful economic policy recommendations. Our first contribution to CliSAP is to provide formal frameworks and techniques for analyzing climate policy in the context of uncertainty. Furthermore, extreme events are an important channel through which climate and the economic system interact. We therefore provide mathematical modelling frameworks allowing a discussion of climate change on the assumption that climate change will modify the probability distribution of the losses they generate.

Vice versa, in what way(s) has CliSAP helped you most?
At its core, economics is about making choices. Economic agents are assumed to be rational and to make choices that maximize their expected utility given the (uncertain) information that is available to them. The more accurate the available information, the better the decisionmaker will be able to predict the outcome associated with possible decisions, and thus make better choices. Multi-disciplinary climate forecasts therefore provide a wealth of opportunities to advance our understanding of future policy options.

What is the role of economic sciences in the framework of climate science?

Climate change is a fundamental challenge to the survival of human civilizations. It also poses a critical challenge to economic theory and practice. Economic science can vigorously and effectively address that challenge, demonstrating with theoretical rigor and econometric analysis how we can afford and manage the economic adjustments needed to address climate change.

Do the other scientific traditions in CliSAP, such as social and natural sciences, understand the paradigm of economic science? Do they recognize the potential of the contributions of your field?
Given the complexity of economic and environmental interactions underlying the climate change issue, no one model can address all of the questions surrounding a climate change economic analysis. But even if a natural science model is considered to be true, one then necessarily has to move into the economics of optimal policy. This important step enabling an assessment is now widely recognized.

Why do we need mathematical models?
Climate policy requires an understanding of how climatic change will impact on humans in both industrialized and developing countries. Climate models are a key tool for simulating possible future climates. Climate models can also be used to make projections about future climate and the knowledge gained can contribute to national and international policy decisions regarding climate change.

When you look back in time, what do you consider the most significant, exciting or surprising developments in the economic analysis of climate change?
Climate economics has been brought fully into the public spotlight.

What do you think is the role of science within society?
Sustainable development can succeed only if scientists deliver proposals for solutions and work together to implement them. To meet the climate challenge, decision-makers require interdisciplinary approaches and strategies that cut across disciplines and political lines.

What constitutes “good” science?

“Good” science tries to answer new questions and achieves this by developing falsifiable hypotheses. Research that cannot ever be disproven isn’t “good” science. Furthermore, “good” science is based on a process of publication and peer review.

What would be your advice for a young researcher, who contemplates specializing in climate economics?

Develop a topic, around which to base your research. At the same time, don’t be single minded. Read widely in the related literature, ask questions about where the field is going, and work with someone established or with someone with different skills from yours, i.e. someone having knowledge of a different subject area. Get an established advisor, who doesn’t try to put you down but is proud of you and has a sense of purpose.

The interview was carried out by Prof. Dr. Hans von Storch, head of the Institute of Coastal Research at the Helmholtz-Zentrum Geesthacht and Jun. Prof. Dr. Mike S. Schaefer, head of the working group “Media Constructions” at the Cluster of Excellence CliSAP.