by Ross McKitrick
- Optimal fingerprinting is a statistical method that estimates the effect of greenhouse gases (GHGs) on the climate in the form of a regression slope coefficient.
- The larger the coefficient associated with GHGs, the bigger the implied effect on the climate system.
- In 2003 Myles Allen and Simon Tett published an influential paper in Climate Dynamics recommending the use of a method called Total Least Squares in optimal fingerprinting regression to correct a potential downward bias associated with Ordinary Least Squares
- The problem is that in most cases TLS replaces the downward bias in OLS with an upward bias that can be as large or larger
- Under special conditions TLS will yield unbiased estimates, but you can’t test if they hold
- Econometricians never use TLS because another method (Instrumental Variables) is a better solution to the problem
