john fernbach wrote:
>
>
>
> However, I believe if you calculate the net present value of some
> catastrophe that lies even 100 or 200 years in the future, using the
> usuual discounting method employed by business economists and
> government planners, you do end up with a net present value for the
> disaster that makes it virtually irrelevant to people living in
> present.
>
> At least this was the consensus of my professors in natural resource
> economics when I was in graduate school a long time ago. Maybe
> business planners and government economists have changed their
> discounting methodologies since then, but if so, I haven't heard of
> it.
>
I don't think so. But the issue only really becomes important when we
get close to a complete destruction of mankind (a *real* catastrophe,
not just a problem), so it probably doesn't make a significant
difference when we are only talking of +-10% changes, and so may be
ignored in many analyses.
It's a big part of Marty Weitzman's argument, that the infinitesimal
probability of an extraordinarily large problem can outweigh all other
considerations in a "rational" analysis, if the problem gets bigger more
rapidly than the probability gets smaller. While I certainly think there
are serious problems with the detail of what he has done, I think the
general premise is not wholly unreasonable - at least if one is going to
undertake such calculations at all.
James
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