Weitzman, Martin2014-10-022014Weitzman, Martin L. 2014. Fat Tails and the Social Cost of Carbon. American Economic Review 104, no. 5: 544–546.0002-8282http://nrs.harvard.edu/urn-3:HUL.InstRepos:12992320At high enough greenhouse gas concentrations, climate change might conceivably cause catastrophic damages with small but non-negligible probabilities. If the bad tail of climate damages is sufficiently fat, and if the coefficient of relative risk aversion is greater than one, the catastrophe-reducing insurance aspect of mitigation investments could in theory have a strong influence on raising the social cost of carbon. In this paper I exposit the influence of fat tails on climate change economics in a simple stark formulation focused on the social cost of carbon. I then attempt to place the basic underlying issues within a balanced perspective.en-USJournal Article2014-09-252014-10-0210.1257/aer.104.5.544