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What are we measuring? Measurement and aggregation issues in economics, with an application to climate risks

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  • Eddie Gerba
  • Gireesh Shrimali

Abstract

This paper reviews the twin challenges of measurement and aggregation in economics and the natural sciences, with climate risk as a guiding example. It synthesises a broad range of theoretical and empirical perspectives, tracing ideas from early systems theory to modern macroeconomic debates, and compares the approaches of economics, complexity science, and climate science to the micro–macro aggregation problem. Several key conceptual tensions are highlighted—most notably the “micro–macro gap†—and the limitations of traditional models when confronted with heterogeneity, deep uncertainty, and non-linear feedbacks are demonstrated, especially in the climate-risk context. It also reviews emerging methodologies and proposes integrated frameworks to combine micro-level detail with macro-level consistency. Finally, the paper outlines a roadmap for future research and policy, advocating interdisciplinary collaboration, improved data infrastructure, and adaptive modelling strategies to better capture climate change

Suggested Citation

  • Eddie Gerba & Gireesh Shrimali, 2025. "What are we measuring? Measurement and aggregation issues in economics, with an application to climate risks," Bristol Economics Discussion Papers 25/801, School of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:25/801
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    References listed on IDEAS

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    5. Kirman, Alan, 1989. "The Intrinsic Limits of Modern Economic Theory: The Emperor Has No Clothes," Economic Journal, Royal Economic Society, vol. 99(395), pages 126-139, Supplemen.
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