Which of satellite- or model-based estimates is closer to reality for aerosol indirect forcing?

In their contribution to PNAS, Penner et al. (1) used a climate model to estimate the radiative forcing by the aerosol first indirect effect (cloud albedo effect) in two different ways: first, by deriving a statistical relationship between the logarithm of cloud droplet number concentration, ln Nc, and the logarithm of aerosol optical depth, ln AOD (or the logarithm of the aerosol index, ln AI) for present-day and preindustrial aerosol fields, a method that was applied earlier to satellite data (2), and, second, by computing the radiative flux perturbation between two simulations with and without anthropogenic aerosol sources. They find a radiative forcing that is a factor of 3 lower in the former approach than in the latter [as Penner et al. (1) correctly noted, only their “inline” results are useful for the comparison]. This study is a very interesting contribution, but we believe it deserves several clarifications.

Natural aerosol direct and indirect radiative effects

Natural aerosol plays a significant role in the Earth’s system due to its ability to alter the radiative balance of the Earth. Here we use a global aerosol microphysics model together with a radiative transfer model to estimate radiative effects for five natural aerosol sources in the present-day atmosphere: dimethyl sulfide (DMS), sea-salt, volcanoes, monoterpenes, and wildfires. We calculate large annual global mean aerosol direct and cloud albedo effects especially for DMS-derived sulfate (–0.23 Wm–2 and –0.76 Wm–2, respectively), volcanic sulfate (–0.21 Wm–2 and –0.61 Wm–2) and sea-salt (–0.44 Wm–2 and –0.04 Wm–2). The cloud albedo effect responds nonlinearly to changes in emission source strengths. The natural sources have both markedly different radiative efficiencies and indirect/direct radiative effect ratios. Aerosol sources that contribute a large number of small particles (DMS-derived and volcanic sulfate) are highly effective at influencing cloud albedo per unit of aerosol mass burden.

Direct and indirect effects of pathological gambling on risk attitudes

We study individual decision making in a lottery-choice task performed by three different populations: gamblers under psychological treatment ("addicts"), gamblers’ spouses ("victims"), and people who are neither gamblers or gamblers’ spouses ("normals"). We find that addicts are willing to take less risk than normals, but the difference is smaller as a gambler’s time under treatment increases. The large majority of victims report themselves unwilling to take any risk at all. However, addicts in the first year of treatment react more than other addicts to the different values of the risk-return parameter.

Testing for bubbles in indirect property price cycles

Speculative bubbles are generated when investors include the expectation of the future price in their information set. Under these conditions, the actual market price of the security, that is set according to demand and supply, will be a function of the future price and vice versa. In the presence of speculative bubbles, positive expected bubble returns will lead to increased demand and will thus force prices to diverge from their fundamental value. This paper investigates whether the prices of UK equity-traded property stocks over the past 15 years contain evidence of a speculative bubble. The analysis draws upon the methodologies adopted in various studies examining price bubbles in the general stock market. Fundamental values are generated using two models: the dividend discount and the Gordon growth. Variance bounds tests are then applied to test for bubbles in the UK property asset prices. Finally, cointegration analysis is conducted to provide further evidence on the presence of bubbles. Evidence of the existence of bubbles is found, although these appear to be transitory and concentrated in the mid-to-late 1990s.

The importance of vertical velocity variability for estimates of the indirect aerosol effects

The activation of aerosols to form cloud droplets is dependent upon vertical velocities whose local variability is not typically resolved at the GCM grid scale. Consequently, it is necessary to represent the subgrid-scale variability of vertical velocity in the calculation of cloud droplet number concentration. This study uses the UK Chemistry and Aerosols community model (UKCA) within the Hadley Centre Global Environmental Model (HadGEM3), coupled for the first time to an explicit aerosol activation parameterisation, and hence known as UKCA-Activate. We explore the range of uncertainty in estimates of the indirect aerosol effects attributable to the choice of parameterisation of the subgrid-scale variability of vertical velocity in HadGEM-UKCA. Results of simulations demonstrate that the use of a characteristic vertical velocity cannot replicate results derived with a distribution of vertical velocities, and is to be discouraged in GCMs. This study focuses on the effect of the variance (σw2) of a Gaussian pdf (probability density function) of vertical velocity. Fixed values of σw (spanning the range measured in situ by nine flight campaigns found in the literature) and a configuration in which σw depends on turbulent kinetic energy are tested. Results from the mid-range fixed σw and TKE-based configurations both compare well with observed vertical velocity distributions and cloud droplet number concentrations. The radiative flux perturbation due to the total effects of anthropogenic aerosol is estimated at −1.9 W m−2 with σw = 0.1 m s−1, −2.1 W m−2 with σw derived from TKE, −2.25 W m−2 with σw = 0.4 m s−1, and −2.3 W m−2 with σw = 0.7 m s−1. The breadth of this range is 0.4 W m−2, which is comparable to a substantial fraction of the total diversity of current aerosol forcing estimates. Reducing the uncertainty in the parameterisation of σw would therefore be an important step towards reducing the uncertainty in estimates of the indirect aerosol effects. Detailed examination of regional radiative flux perturbations reveals that aerosol microphysics can be responsible for some climate-relevant radiative effects, highlighting the importance of including microphysical aerosol processes in GCMs.

Jump and variance risk premia in the S&P 500

We analyze the risk premia embedded in the S&P 500 spot index and option markets. We use a long time-series of spot prices and a large panel of option prices to jointly estimate the diffusive stock risk premium, the price jump risk premium, the diffusive variance risk premium and the variance jump risk premium. The risk premia are statistically and economically significant and move over time. Investigating the economic drivers of the risk premia, we are able to explain up to 63 % of these variations.