Michael Tobis wrote:
> I get the sense that you are being rather too academic here, James.
> There are real and urgent problems to grapple with.
Well, maybe. I'm trying to counter the widespread belief that standard
economic analysis discounts disasters to effectively nothing over long
periods of time. While distant losses (and gains) are discounted, large
losses are also inflated for anyone who is reasonably risk-averse.
Betting $100 on a coin toss would be generally taken to have negative
expected utility, because the benefit of an extra $100 is (slightly)
lower than the pain of losing $100. The benefit of gaining 100% in
economic terms would be massively (infinitely) outweighed by the pain of
losing everything, with a plausible (logarithmic) utility curve.
OTOH, you are right that this is rather academic when it comes down to
<10% issues. But these aren't disasters in any meaningful sense of the
word, especially when they happen at a steady(ish) rate and are set
against a background growth of 1000% on the same time scale. Even if you
don't believe in this sort of (implicitly) unbounded growth, 10% is
still only a few years of normal current growth.
You beef is, I think, not that the standard economic analysis is wrong,
but that it does not properly value things that you value. I suspect
that is more an issue of the figures used, than the theory itself.
> Even if one accepts your argument, they don't go away. In the terms you
> describe, suppose there are five 10% problems we are neglecting on the
> above basis. Or fifty of them. How do they interact? I think that is
> actually a good model of what we are up against. It's not the 3 C, its
> the twenty top consequences of it or so, along with the thirty other 10%
> items we are neglecting.
If you split up things finely, I don't think that many individual
consequences can plausible amount to as much as 1% (each) on the century
time scale, let alone 10%.
James
--~--~---------~--~----~------------~-------~--~----~
You received this message because you are subscribed to the Google Groups
Global Change ("globalchange") newsgroup. Global Change is a public, moderated
venue for discussion of science, technology, economics and policy dimensions of
global environmental change.
Posts will be admitted to the list if and only if any moderator finds the
submission to be constructive and/or interesting, on topic, and not
gratuitously rude.
To post to this group, send email to [email protected]
To unsubscribe from this group, send email to [EMAIL PROTECTED]
For more options, visit this group at
http://groups.google.com/group/globalchange
-~----------~----~----~----~------~----~------~--~---
