Beyond Discounting Climate Change
(2012) NEKH01 20121Department of Economics
- Abstract
- The question of which discount rate to choose when it comes to calculating costs and benefits regarding climate change has been discussed among economists since at least the beginning of the 1990’s. However, the issue of which discount rate to choose is not just an academic question, it also has major implications for climate change policy. In this paper I will show that there exists large disagreements among economists on which discount rate society should choose when calculating the costs and benefits of climate change. Moreover, because of large uncertainties, non-marginal effects, and specific aspects of the social welfare function commonly used in welfare economics, I suggest that we shift focus away from the choice of discount rates... (More)
- The question of which discount rate to choose when it comes to calculating costs and benefits regarding climate change has been discussed among economists since at least the beginning of the 1990’s. However, the issue of which discount rate to choose is not just an academic question, it also has major implications for climate change policy. In this paper I will show that there exists large disagreements among economists on which discount rate society should choose when calculating the costs and benefits of climate change. Moreover, because of large uncertainties, non-marginal effects, and specific aspects of the social welfare function commonly used in welfare economics, I suggest that we shift focus away from the choice of discount rates altogether. We should instead focus on the risk of possible limitations of people’s freedoms and opportunities to lead valuable lives. This shift in focus will affect the way we normally reason when it comes to the economics of climate change. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/2629087
- author
- Andersson, Julius LU
- supervisor
- organization
- course
- NEKH01 20121
- year
- 2012
- type
- M2 - Bachelor Degree
- subject
- keywords
- discounting, climate change, Ramsey rule, freedoms and opportunities
- language
- English
- id
- 2629087
- date added to LUP
- 2012-06-15 12:44:00
- date last changed
- 2012-06-15 12:44:00
@misc{2629087, abstract = {{The question of which discount rate to choose when it comes to calculating costs and benefits regarding climate change has been discussed among economists since at least the beginning of the 1990’s. However, the issue of which discount rate to choose is not just an academic question, it also has major implications for climate change policy. In this paper I will show that there exists large disagreements among economists on which discount rate society should choose when calculating the costs and benefits of climate change. Moreover, because of large uncertainties, non-marginal effects, and specific aspects of the social welfare function commonly used in welfare economics, I suggest that we shift focus away from the choice of discount rates altogether. We should instead focus on the risk of possible limitations of people’s freedoms and opportunities to lead valuable lives. This shift in focus will affect the way we normally reason when it comes to the economics of climate change.}}, author = {{Andersson, Julius}}, language = {{eng}}, note = {{Student Paper}}, title = {{Beyond Discounting Climate Change}}, year = {{2012}}, }