The Role of Economics in Public Policy

Most large-scale energy initiatives follow the same pattern: start with big commitments, roll out connections, figure out the policy later. Nigeria did the opposite. And that’s why it’s working. Instead of treating private investment as an afterthought, Nigeria built the policy framework first. And that made all the difference. What Nigeria Got Right - 1. A Structured Energy Compact – Nigeria created a clear, integrated policy that combines grid expansion, mini-grids, and decentralized solutions into a single plan. Other countries still treat off-grid power as an afterthought. 2. Private Sector Was Built Into the Model – Most African energy plans rely almost entirely on government spending. Nigeria understood that public money alone won’t be enough, so they de-risked the investment landscape for private players. 3. Policy Stability That Investors Can Trust – The biggest deterrent to energy investment is regulatory unpredictability. Nigeria structured clear rules around licensing, tariffs, and long-term market participation, giving businesses and investors the ability to plan long-term—not just react to political cycles. The Results Speak for Themselves - - Nigeria is now the leading mini-grid market in Africa. - Private capital is flowing into the energy sector at scale. - The policy model is structured for real expansion—not just short-term funding cycles. Now compare this to many other Mission 300 countries - - There’s no clear strategy to integrate decentralized and centralized power. - Investment risk is still too high for private capital to flow at scale. - The policy landscape remains too unstable for long-term planning. Nigeria isn’t perfect. But it’s one of the few places where energy policy is being built for growth, not just for the next round of funding. If Mission 300 countries want to make real progress, this is the playbook - - Stable, investment-friendly regulation - A clear plan that integrates all forms of power - Long-term market structures that attract capital at scale Energy access is an industry, not a one-time intervention. And Nigeria is proving that when the policy is right, the investment follows. #NigeriaEnergy #Mission300 #SmartInvestment #EnergyForGrowth

👉 Are we using the wrong tools to assess climate risk? A new expert-led assessment, drawing on the judgment of 60+ climate scientists, says that #climatechange introduces forms of risk that exceed the design assumptions of existing economic and financial frameworks. Here’s what that means in practice ⬇️ 🔹 Climate damages are structural, they reshape economies: where people live, what can be produced, how infrastructure functions, and which regions remain viable. 🔹 Extremes drive real-world risk: what actually destabilises societies and markets are heatwaves, floods, droughts, grid failures, food shocks. It’s the tails of the distribution that matter. 🔹 GDP misses mortality, inequality, displacement, ecosystem loss, and can even rise after disasters due to reconstruction. This creates a dangerous illusion of resilience. 🔹 Repeated shocks erode recovery capacity and propagate across supply chains, finance, migration, and geopolitics. 🔹 Beyond ~2°C, uncertainty widens sharply. Confidence in precise damage estimates falls even as consequences grow. 🔹 Tipping points expose the limits of economic modelling: At higher warming levels, model outputs can appear precise while resting on assumptions that no longer hold. At the same time, many models also underestimate positive tipping points in clean energy and innovation. The goal is to build resilience under deep uncertainty. For treasuries, central banks, regulators, and long-horizon investors, this means recalibrating governance toward: ➡️ precaution ➡️ robustness ➡️ transparency Because avoiding irreversible outcomes is always cheaper than trying to price them after the fact. read the report "Recalibrating Climate Risk" here 👇 https://lnkd.in/dx8wmRZ4 Green Futures Solutions (University of Exeter) Carbon Tracker @aurora trust

Energy is no longer simply an input to economic growth. It is becoming one of the factors that shapes where growth is possible.     Countries that consistently produce more energy than they consume are building capacity that extends well beyond their energy sectors. Greater energy availability can support industrial growth, manufacturing expansion, digital infrastructure, and resilience during periods of economic or geopolitical disruption.     The opposite is not necessarily a disadvantage. Many highly successful economies import significant amounts of energy while creating tremendous value through innovation, advanced manufacturing, and global trade. It does, however, create a different set of strategic considerations around resilience, diversification, and long-term planning.     As demand grows—from AI and data centers to electrification and advanced manufacturing—energy strategy is increasingly becoming business strategy. Competitive advantage is shaped not only by how organizations and nations create value, but also by the systems that enable that value to be created in the first place. 

𝗪𝗵𝘆 𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝘀𝘁𝘀 𝘀𝘆𝘀𝘁𝗲𝗺𝗮𝘁𝗶𝗰𝗮𝗹𝗹𝘆 𝘂𝗻𝗱𝗲𝗿𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲 𝗰𝗹𝗶𝗺𝗮𝘁𝗲 𝗿𝗶𝘀𝗸𝘀 A new report (👉https://lnkd.in/eMsCKQuh) exposes a fundamental gap between what climate scientists expect and what economic models predict. 𝗧𝗵𝗲 𝗰𝗼𝗿𝗲 𝗽𝗿𝗼𝗯𝗹𝗲𝗺: 68 climate scientists from 12 countries were surveyed about economic damage estimates. Their insights differ radically from standard models: 🔴 At 3°C warming, experts estimate median GDP damage at ~35%. The Nordhaus DICE model predicts only ~3% 🔴 36% of scientists place the "collapse threshold" 𝘣𝘦𝘭𝘰𝘸 4°C, while many scenarios model up to 4°C and beyond 🔴 250 million people displaced by climate disasters in the past decade, impacts barely visible in GDP figures 𝗪𝗵𝘆 𝘄𝗲 𝗺𝗲𝗮𝘀𝘂𝗿𝗲 𝘄𝗿𝗼𝗻𝗴: We focus on global averages, but people experience 𝘭𝘰𝘤𝘢𝘭 𝘦𝘹𝘵𝘳𝘦𝘮𝘦𝘴: the 2021 Texas storm caused $195 billion damage while barely registering in global temperature statistics. GDP often 𝘳𝘪𝘴𝘦𝘴 after disasters (reconstruction spending) while real wealth declines – the "disaster industrial complex" accounts for 1/3 of US economic activity at 1.4°C warming Models assume smooth damage curves but ignore tipping points, cascades, and system failures 𝗪𝗵𝘆 𝘁𝗵𝗶𝘀 𝗺𝗮𝘁𝘁𝗲𝗿𝘀: This gap determines how pension funds assess risks and how central banks conduct stress tests. The NGFS recently raised damage estimates from 7-14% to 30% GDP loss at 3°C, but climate scientists say even this underestimates. 𝗧𝗵𝗲 𝘂𝗻𝗱𝗲𝗿𝗹𝘆𝗶𝗻𝗴 𝗰𝗮𝘂𝘀𝗲: Research ( 👉 https://lnkd.in/eVsBapbT) shows "disciplinary asymmetries": economists seek optimization within existing systems; natural scientists see limits and tipping points. Where economists use GDP as proxy, scientists see missed impacts on health, ecosystems, and inequality. As a consequence, environmental scientist see degrowth as an option, while economist favour market based solutions 👇 . 𝗪𝗵𝗮𝘁 𝗻𝗼𝘄: The report calls for "recalibration toward precaution, robustness, and transparency": ✓ Report ranges instead of point estimates ✓ Acknowledge where models fail (especially above 2-3°C) ✓ Integrate metrics beyond GDP: mortality, inequality, ecosystem degradation ✓ Model cascades and second-order effects The crucial insight: climate change introduces risks exceeding existing economic frameworks. The response is not waiting for perfect models, but recognizing that avoiding irreversible outcomes is cheaper than pricing them after the fact. For long-term investors: climate risk cannot be fully diversified away. It's a systemic risk requiring fundamentally different strategies. #climaterisk #climateeconomics #systemchange #financialrisk #sustainablefinance

"Our current #market-led approach to mitigating #climate and #nature risks is not delivering. There is an increasing risk of severe #societal disruption (Planetary Insolvency), as our #economic system drives further global warming and nature #degradation." Not, in fact, another alarmist catchcry from climate extremists, rather a statement from that most analytical and methodical of professions, #actuaries. A profession whose work underpins the functioning of the global pension market with $55 trillion of assets, and the global insurance market, collecting $8 trillion of premiums annually. When actuaries warn of a >$50% loss in global #GDP, it's (well past) time to sit up and listen. What's notable in this latest report (no doubt timed to coincide with the World Economic Forum's latest #GlobalRisk review) is that it reiterates a message from the Institute and Faculty of Actuaries' 2023 publication "The Emporer's New Climate Scenarios", that #ClimateChange risk assessment methodologies, and the climate #scenarios that we have been using to underpin our disclosures and #TransitionPlanning, are understating economic impact, as they often "...exclude many of the most severe risks that are expected and do not recognise there is a risk of ruin. They are precisely wrong, rather than being roughly right." 

If it's 2026, why is the data, models, and weights so 'last century'? We have autonomous vehicles, AI, real-time payments, digital commerce, and satellites tracking almost everything on earth. Yet much of the data we use to measure inflation, employment and economic growth is still built on methodologies designed from last century and measured manually. For example, CPI still relies on data collection personnel visiting stores, calling businesses, and gathering prices through traditional surveys. Consumer spending weights are updated annually, but they reflect spending from two years earlier. In an economy where consumers can instantly switch brands, retailers and services, two-year-old spending patterns does not capture the true picture, while the survey set is too narrow, and the weights are misleading. Commerce Secretary Howard Lutnick has questioned whether the architecture of economic measurement needs to change, a view supported by Treasury Secretary Scott Bessent, who rightly emphasize the importance of accountability by accurately measuring, maintaining and reporting the data. This problem is highlighted by large revisions because the data collection is antiquated. Federal Reserve Chairman Kevin Warsh has set up a task team to tackle this issue head-on. Warsh has called much of the data relied upon by policymakers "old-fashioned survey methods” that can look very little like the economy of 2026. He has called for new data sources, better analytics, and more real-time information. He is right to be critical, Millions of transactions can be analyzed in real time. Prices across e-commerce can be observed continuously rather than sampled periodically. AI can process enormous datasets, identify patterns in consumer behavior far faster than traditional surveys. Better data means better decision making, which matters enormously for markets since it influences interest rates, monetary policy, corporate matters, and capital allocation decisions for investors. Today's Fed’s 2:00 p.m. ET decision, the question goes deeper than whether the Fed will hold rates constant or tighten, it's: Is the Fed making its decisions with the best data available? In the age of big data and AI, the answer should be unequivocally yes.

"Ryan is Curious" - Why is monetary policy still treated like a niche topic—when it drives every major business decision? 📍 Monetary Policy isn’t just for Economists—It’s for strategic leaders With Jackson Hole in the spotlight, central bankers are shaping the future of interest rates, inflation, and economic growth. I get asked this all the time—especially when the Fed signals a shift. 👉 “What does this actually mean for my business?” Let’s break it down: 🧠 Monetary policy is how the Federal Reserve influences: • Inflation • Interest rates • Credit availability • Economic growth 🏛️ The FOMC (Federal Open Market Committee) meets 8x/year to: • Hear economic data • Deliberate direction • Vote on policy 🔧 Their toolkit includes: • Open market operations • Reserve requirements • Discount rate changes • Interest on reserve balances These tools shape how much money banks can lend, how confident businesses feel, and how fast your strategic plans can move. 💬 Why this matters now: At Jackson Hole, the Fed is signaling a firmer stance on inflation. That means tighter conditions, slower growth, and more pressure on decision-makers. If you’re leading a business, investing in property, or planning for scale—this affects you. This isn’t just macroeconomics. It’s operational strategy. It’s your hiring roadmap. It’s your investment timing. It’s your ability to move with confidence. Let’s continue raising the bar on economic literacy. What’s one signal or concept you wish was explained more clearly—or one you rely on to make strategic moves? Drop it below. This is my public service announcement. 😊 #Finance #Leadership #Markets

The significance of today’s firing of the BLS Commissioner cannot be overstated. One of the most essential official statistics for monitoring the economic cycle of the world’s largest economy—the unemployment rate—may now become unreliable, and therefore, less forecastable. The same concern extends to the US consumer and producer price indexes, also produced by the BLS. Non-official data may begin to exert more influence on markets than in the past. While there is no shortage of alternative indicators to track employment and inflation dynamics, these measures lack the institutional grounding and integration into the national accounts that official statistics possess. Neither do they address some of the real world implications of potentially tampering with the data that underpins indexation contracts, from social security benefits to TIPS pricing. This also raises the question of what happens when other official data—such as those on GDP or trade, produced by the Bureau of Economic Analysis—begin to deteriorate or show large revisions? Undermining the neutrality of statistical agencies (or central banks, for that matter) strikes at a foundational pillar of economic analysis, policymaking, and investment decision-making. When trust in official data erodes, it means we’re flying blind and policy goes from evidence-based to arbitrary.

States and financial bodies using modelling that ignores shocks from extreme weather and climate tipping points, writes Damian Carrington. https://lnkd.in/et-3yWge Flawed economic models mean the accelerating impact of the #climatecrisis could lead to a global financial crash, experts warn. Recovery would be far harder than after the 2008 financial crash, they said, as “we can’t bail out the Earth like we did the banks”. As the world speeds towards 2C of global heating, the risks of extreme weather disasters and climate #tippingpoints are increasing fast. But current economic models used by governments and financial institutions entirely miss such shocks, the researchers said, instead forecasting that steady economic growth will be slowed only by gradually rising average temperatures. This is because the models assume the future will behave like the past, despite the burning of #fossilfuels pushing the climate system into uncharted territory. Tipping points, such as the collapse of critical Atlantic currents or the Greenland ice sheet, would have global consequences for society. Some are thought to be at, or very close to, their tipping points but the timing is difficult to predict. Combined #extremeweather disasters could wipe out national economies, the researchers, from the University of Exeter and financial thinktank Carbon Tracker, said. Their report concludes governments, regulators and financial managers must pay far more attention to these high impact but lower likelihood #risks, because avoiding irreversible outcomes by cutting carbon #emissions is far cheaper than trying to cope with them. “We’re not dealing with manageable economic adjustments,” said Dr Jesse F Abrams, at the University of Exeter. “The climate scientists we surveyed were unambiguous: current economic models can’t capture what matters most – the cascading failures and compounding shocks that define climate risk in a warmer world – and could undermine the very foundations of economic growth.” “For financial institutions and policymakers, it’s a fundamental misreading of the risks we face,” he said. “We are thinking about something like a 2008 [crash], but one we can’t recover from as well. Once we have ecosystem breakdown or #climatebreakdown, we can’t bail out the Earth like we did the banks.” Mark Campanale, CEO of Carbon Tracker, said: “The net result of flawed economic advice is widespread complacency amongst investors and policymakers. There’s a tendency in certain government departments to trivialise the impacts of climate on the economy so as to avoid making difficult choices today. This is a big problem – the consequences of delay are catastrophic.” Read more below. Read the report here: https://lnkd.in/erv73pNh

The Government Shutdown and the Price of Losing Data The shutdown has halted all “non-essential” government activities — you know, super non-essential things like producing the CPI, which the BLS is supposed to release next week. We’ve already lost the latest labor market data. At this rate, maybe the new strategy is to make the Fed’s job simpler (for Oct 29th) by eliminating all relevant information. If policymakers are going to be confused, they might as well be completely confused instead of just halfway there. This isn’t the first time the BLS couldn’t release the CPI — not because they’re failing at their job, but because Congress is failing at theirs. The same thing happened under the Obama administration. Back then, Alberto Cavallo and I (mostly Alberto!) were working on the Billion Prices Project (https://lnkd.in/gKjPamkG), using online data to estimate inflation in real time. That work helped the U.S. — and later supported Argentina as it rebuilt its inflation statistics after years of political interference during the Kirchner era. After two decades of research, a few lessons stand out: 1.     Statistical offices are essential. Managing an economy without reliable data is nearly impossible. Humans are biased, and data is what helps us confront those biases. Without evidence, decisions are driven by instinct — and often by the wrong ones. 2.     Independence builds trust. Data only matters if people believe in it. When the same actors who make policy also control how statistics are produced, credibility collapses. Independence isn’t optional — it’s the foundation of informed democracy. 3.     Private data complements, but doesn’t replace, official statistics. Private-sector datasets can fill gaps and offer valuable checks on public numbers, but they can’t substitute for trusted, transparent, and consistent official data. When statistical institutions are weakened or politicized, the result is always the same: confusion, distortion, and, eventually, crisis. Just ask Argentina, Turkey, or Venezuela. The integrity of economic data is not a technicality — it’s a cornerstone of democratic governance, economic management and market stability. The United States has long been regarded as the gold standard for official statistics, but that reputation cannot be taken for granted. Declining survey response rates, shrinking budgets, political interference, and shutting them down are real threats that erode public trust. It’s a bit depressing — but also hopeful and reassuring — that we might once again need Alberto to save us from Congressional dysfunction. Data is not “non-essential.” It’s how a society knows itself.