Heat waves swept the globe this summer—including in places you wouldn’t expect. Belfast, Ireland; Montreal, Canada; Burlington, Vermont; and Mount Washington, New Hampshire reached temperatures normally experienced in the Middle East or Africa. Even the Arctic didn’t escape the heat. These record temperatures bring deadly consequences, with at least 70 people dying in Canada and 90 in Japan this summer alone.

In the last few years, economists have uncovered an interesting phenomenon: In hotter years, the economic output of countries goes down. Developing countries located in tropical regions get hit the hardest, but everyone suffers. Climate change will exacerbate this effect. Scientists estimate that if nothing is done to reduce greenhouse gas emissions, hotter temperatures could reduce global incomes by an average of 23% by 2100.

Why is there such a strong correlation between heat and economic loss? There are several possibilities. Crop yields fall when it gets very warm. Heat also increases mortality and illness. Some evidence even suggests that the likelihood of conflict increases in hot years. While all of these factors likely play some role, the root cause may be more fundamental and more problematic: When exposed to uncomfortably high temperatures, human physiology makes us less productive.

My colleagues and I decided to investigate how important this fact might be in the big picture. We started by looking at the productivity of workers in India, the world’s third largest economy and a normally hot climate. We discovered that the productivity of workers engaged in activities such as cloth weaving or garment manufacturing dropped by as much as 4% for every degree that temperatures rose above 27° Celsius (80.6° Fahrenheit). But when we studied workers in the steel industry, who were operating machinery in plants with highly automated production, we found productivity did not fall.

This drop in performance in cases where machines aren’t doing most of the work is likely due to both physiological as well as cognitive impairment in the heat. When one group of researchers compared college students living in dorms with and without air conditioning, they found that those without air conditioning scored 13% lower on basic arithmetic tests. Others found taking an exam on a 90°F day leads to around an 11% lower likelihood of passing compared to a 72°F day.

Productivity at work wasn’t the only thing that changed in our analysis. People also tended to stay home in the heat. For example, the garment sewers we followed were 5% more likely to be absent during a hot spell. Crucially, absenteeism also affected people making steel products on highly mechanized shop floors. Skipping work might reflect the fact that sustained heat causes fatigue, illness, or worse—problems everyone must deal with, regardless of the conditions at the workplace itself.

When workers are less productive or not working at all, the factory or company they work for is probably also less productive. We used data from almost 70,000 plants across India and found that the value of factory output declined by 3% per degree Celsius in hot years. That loss is large enough to explain the entire reduction in India’s economic output in hot years. The implications of these results go beyond developing countries for the simple reason that human physiology is the same everywhere.

So, what can we do to improve productivity during hot weather? Air conditioning sounds like an obvious answer. Unfortunately it’s simply unaffordable to many people around the world. While 87% of households in the United States have air conditioners, only 5% of those in India do. Air conditioners also come with their own climate consequences. They use a lot of electricity, which means emitting more greenhouse gases.

But let’s suppose that the world could somehow install air conditioners everywhere. Would that fully solve the problem? When we compared the productivity of plants that had installed some form of climate control to those that hadn’t, we found that workers in plants with climate control were more productive. But, here’s the catch: The climate control didn’t help get people to work. Workers still stayed home on hot days. Of course, the other issue is that climate control only works for those workers who are indoors. It’s not a viable option for the many workers all around the world who spend most of their days outdoors—agricultural workers, construction workers, and so forth.

To truly have an impact in maintaining productivity, the priority must be mitigating climate change before hot temperatures get even hotter. If that doesn’t happen, business owners and policymakers alike might need to be prepared for large shifts in where and how people work. Factories may need to relocate to cooler regions, or more job functions may need to be automated. These changes would mean displaced workers would need to find new jobs and many developing countries in hot parts of the world might find it even harder to climb out of poverty.

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Areas of Focus: Climate Change
Climate Change
Climate change is an urgent global challenge. EPIC research is helping to assess its impacts, quantify its costs, and identify an efficient set of policies to reduce emissions and adapt...
Climate Economics
Climate Economics
Climate change will affect every sector of the economy, both locally and globally. EPIC research is quantifying these effects to help guide policymakers, businesses, and individuals working to mitigate and...