Friday, January 30, 2009

Do Extreme Records Favor Earlier Events?


Over the past few weeks, I have published various perspectives related to my macro-analysis of the U.S. Climate based on statewide, monthly extreme temperature records.  Rather than use calculated averages and algorithmically adjusted data, this analysis depends on actual records over nearly 13 decades.  The analysis challenged the thesis that there is a widespread global warming as evidenced by the increased frequency of new record temperature extremes.  

With regard to maximum temperatures, the results showed:
  • the 1930s were, by far, the warmest recorded decade

  • the 1990s were no more "extreme" than an average decade

  • the 2000s have been far less "extreme" than most decades

At the economics blog, Carpe Diem, a discussion about global warming was posted last week.  One of the comments was this:
At 1/20/2009 4:01 PMBlogger misterjosh said...

Bruce, I forgot to mention - the hallofrecord study doesn't pass my gut check. Any measure of records of a given items is always going to favor earlier events.

Let's discuss this "gut check."  The issue has been raised to me before.

In a very short time series, let's say a few years, there will be insufficient opportunity to determine if the data represent low, normal, or high values related to a longer time series.  The "all-time" monthly records require 600 values.  This is 50 states times 12 months.

In one year, there are 600 maximum [and minimum] points established... monthly all-time "records."  
  • These are maximums of all recording stations from 50 states times 365 days of observation:  18,250 statewide daily maximums consolidated to the 12 monthly extremes for the 50 states.  
  • In one decade, the 600 records are based on 182,500 maximums [I'm ignoring leap years.] 
  • In the 129 years of the timeline used in my study, there were 2,354,250 daily statewide maximums used to establish the 600 records... a reasonable "sampling."
The methodology biases the month/year point of the record to the latest incident of the record temperature.  If an old record is tied or surpassed, the record goes to the latest date.  
Because these records are based on absolute temperatures and tie-goes-to-the-latest methodology, there is no favoring earlier points after a reasonable time has passed... and 129 years and 2,354,250 daily observations is more than reasonable.
In fact, the methodology actually biases toward the latest occurrences... because it is a replacement methodology, not an additive one.  
Stated another way, if the number of records that occurred in a year were kept forever as the basis a growing count, then the bias would be toward the earlier years which had the easiest opportunity to set records.  But, because the number of records for a year is reduced when tied or surpassed by a later year as the basis of a constant count, there can be no long-term bias toward early years.
It is theoretically possible for all records to be set during one extremely hot year... simply by tying previous records.  Therefore, every year in the series has an equal opportunity to set an "all-time" record... simply by being equal to or hotter than prior years.
If the proposition that earlier years were favored were true, then one would expect that the highest incident would have been the beginning decade of the 1880s... which happen to have the lowest incident with only 3 maximum records.
What doesn't pass the test is... the "gut check" which was another way of saying that "I didn't really examine the numbers."  I hope "misterjosh" now understands the reason why this is a valid analysis.


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February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)