NUSEconDigest
May 2025
How will Heat Affect Economic Activity in the Rich Urban Tropics?
Heat affects billions of people worldwide. In a recent study, Fesselmeyer, Liu, Salvo, and Simorangkir (2024) analyze how ambient heat influences economic activity in Singapore, a prosperous tropical city-state, offering novel insights into both heat’s direct effects and the mechanisms of urban adaptation.
Their study leverages space- and time-highly resolved mobility data to analyze the effects of heat temperature on the attendance in offices, malls, and schools, with a particular focus on low-income residents who may have limited access to home cooling.
The study finds that a 1°C increase in the daily maximum heat index is associated with a 0.4% increase in office occupancy and a 0.6% increase in mall visits, suggesting that workers and leisure seekers gravitate towards air-conditioned environment on hotter days. Public transit data shows that low-income residents, particularly those commuting to industrial areas, are more likely to go to work on hot days, possibly due to cooler spaces provided at workplaces compared to their homes.
School attendance fluctuates with heat. There is on average more school attendance in hotter days. Such effects are more prominent for low-income students. However, schools lacking adequate cooling measures show no significant increase in student attendance during hotter periods, underscoring a clear link between adoptive infrastructure availability and behavioral responses to heat.
The study highlights significant adaptation to heat through defensive capital investment, particularly air conditioning, mitigating the negative impacts of heat on productivity typically seen in other contexts. However, the authors caution that increased reliance on air conditioning exacerbates energy consumption and may intensify the long-term climate crisis, despite short-term protective effects.
Above-median heat significantly shift people’s activities toward air-conditioned shops, restaurants, and workplaces.
In summary, this study provides critical insights into urban adaptation strategies to climate variability and raises important considerations on socio-economic inequalities in adaptive capacity and the sustainability of adaptive technologies in the context of global climate change.
- Summarized by Jingyuan Guo
Reference:
Fesselmeyer, Eric, et al. "Heat and observed economic activity in the rich urban tropics." The Economic Journal 134.664 (2024): 3445-3460, https://academic.oup.com/ej/article/134/664/3445/7685540
