Is there a correlation between the stock market and global warming?

Question

Ken provided this nice graph of the Dow Jones Industrial Average since 1929:

http://finance.yahoo.com/q/bc?s=%5EDJI&t=my&l=on&z=l&q=l&c=

And here is a plot of average global temperature since 1880:

http://data.giss.nasa.gov/gistemp/graphs/Fig.A2.lrg.gif

Striking similarity, don't you think?

Answer 1

What you do? Wonder how you get this much time to research on such an important issue !

Answer 2

You illustrate how two sets of data can be manipulated to make a connection and/or conclusion that is not in evidence.  Using a linear scale and absolute values, any similarities disappear, with temperature being a horizontal line and DJIA a positive geometric curve.

Amazing what a little manipulation can do.

Answer 3

I THINK ITS GOT MORE TO DO WITH THE PRICE OF OIL.

Answer 4

It's because temperature is correlating with total CO2 emissions and US CO2 emissions are correlated with domestic activity in the US.  See here:

http://photos.mongabay.com/07/c02_us_chi...

Note the flat parts in the temperature trend correspond to times when some combination of US and European CO2 emissions were flat (mainly due to economic depression or wars (WW2 and Vietnam (Vietnam was a huge drain on the US economy))).  There is also a nice correlation between US CO2 output, the DJIA, and the temperature record, although I suspect the correlation with temperature is a bit fortuitous (or more correctly reflecting a tight coupling between the US and global economy post WW2).  

As China becomes more important, we should see the global temperature record decorrelate from US economic activity.

Answer 5

There is a correlation between global temperatures during my lifetime  and the number of gray hairs I have in any given year.  There's been quite a spike in the last few years, in fact, and I suspect there will be a continued upward trend, at least to the 100% level.  

That does not mean there is CAUSATION, Dana.  *L*

The growth of the economy, however, does have something to do with both the stock market AND the man-made contribution of green house gases. The growing economies of third world countries, the burning of the Amazon rain forest, and so on also contribute to both the DOW and the green house gases.

  But the graphs alone don't tell the whole story, and you know it.  You do a disservice to the science I think you love when you oversimplify.

Answer 6

I wouldn't take this very far, but economic growth certainly does drive more greenhouse gas emissions which causes warming.

Answer 7

Of course not.  The stock market is a man made entity that is designed to increase in value over time.  

Climate is a chaotic force that is controlled by the variables of nature.

It's foolish to compare the two.

Answer 8

Do you even know what a correlation is?  There is no way you can correlate these two curves.  If you disagree, please provide us with the correlation.

Answer 9

Yes the same could be said for O2 and dirty socks.

Answer 10

I scoffed at the question but it's actually an interesting concept... economic growth as a proxy for a by-product of energy use (greenhouse gas release and global warming).

Shouldn't there be more of a lag between the carbon release (economic growth) and the warming?  The stock market might have a 3 to 12 month lag built in as it reacts to quarterly and annual reports, so that might shift its graph slightly closer to the resulting temperatures than the process should warrant.

Answer 11

The capitalist society that we live in is driven by greed and the need to consume ever greater amounts of useless garbage. While this is good for the economy it is not as good for the environment.

The major plus point on the horizon is the slowing down of the US economy. Hopefully people will not drive as much as the price of fuel increases and will think about buying products that are more efficient to run and not because it is louder, faster, or bigger which unfortunately seems to be the goal at the moment.

Answer 12

Anyone, except maybe a conservative die hard with their head buried in the sand could make several additional direct correlations between these two charts;

Population Growth

Excessive Natural Resource Consumption

Increased Pollution from Excessive Consumption

Destruction of Eco Systems that recycle and clean our water and air

But it would seem most of the Global Warming opposition are very shallow thinkers, and can not see past their own noses!

I get so tired of the politics that are drawn into this... and the immature stereotypes that are thrown around about socialism and anti-capitalism.

In a few more years green will be mainstream, it won't even be associated with current politics. Then we can begin to isolate and address the things that still need change as old school and wrong.

Time for some of you people that post here in opposition to AGW to consider crossing over to the other side. The tide has gone out on this issue, and you are a tiny minority in the world mix.

Answer 13

Yes there should be a correlation, a warmer climate leads to more prosperity.

Answer 14

Yes there is a correlation. You can't deny that. However, it takes further investigation to see whether the 2 variables are linked or not. In doing so, you need to consider as many variables as possible.

Hence, its inconclusive unless more evidence provided.

To the narrow minded idiots out there, that does NOT mean 'global warming is fake'.

Answer 15

Yeah, when the belief in GW is up, stocks are down.

Because GW is not about the temperature, it is about anti-capitalism, and socialism, both of which you are in favor of, and the stock market is against.

Plus if you believe what a liberal says about economics, then I have some carbon credits to sell you.

Answer 16

Industrial output correlates with CO2 emissions correlates with global warming.  Industrial output correlates with the wealth of leading companies correlates with stock market index.  I wouldn't take the connection too far though as this is just an index of leading shares for one country, un inflation corrected and increasingly industrial output is becoming decoupled from emissions with computer technology for example and the increasing real price of energy.

Answer 17

Well it is possible in a way I suppose. If the market is in an expansionary period firms may produce more in their factories which would release more c02 in the air which would make the temperature increase faster. While if the market is in a resessioin firms may produce less which would use less c02 which would make the temperature increase at a lower rate.

Answer 18

Interesting. I don't think they are directly realated.