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On Modeling and Interpreting the Economics of Catastrophic Climate Change

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2009

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10.1162/rest.91.1.1

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Massachusetts Institute of Technology Press
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Weitzman, Martin L. 2009. On modeling and interpreting the economics of catastrophic climate change. Review of Economics and Statistics 91(1): 1-19.

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With climate change as prototype example, this paper analyzes the implications of structural uncertainty for the economics of low-probability, high-impact catastrophes. Even when updated by Bayesian learning, uncertain structural parameters induce a critical “tail fattening” of posterior-predictive distributions. Such fattened tails have strong implications for situations, like climate change, where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages. This paper shows that the economic consequences of fat-tailed structural uncertainty (along with unsureness about high-temperature damages) can readily outweigh the effects of discounting in climate-change policy analysis.

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http://nrs.harvard.edu/urn-3:HUL.InstRepos:3693423

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I so greatly appreciate Open Access articles, I am a Master of International Public Policy student in Canada and think this advocacy effort is well-worth the fight. Open Access has a profound effect on not only myself and my ability to learn and grown but on the role of academic libraries. Rather than being a gatekeeper for information created elsewhere, the world and epistemic communities must support the creation and dissemination of scientific and scholarly information produced within the parent institution of the library. It is a brilliant initiative and thank you very much for this article.
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On Modeling and Interpreting the Economics… : DASH Story 2013-05-28
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On Modeling and Interpreting the Economics… : DASH Story 2013-10-19
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On Modeling and Interpreting the Economics… : DASH Story 2013-11-26
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