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Agreeing to disagree on climate policy

Heal, Geoffrey and Millner, Antony (2014) Agreeing to disagree on climate policy. Proceedings of the National Academy of Sciences of the United States of America, 111 (10). pp. 3695-3698. ISSN 0027-8424

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Identification Number: 10.1073/pnas.1315987111


Disagreements about the value of the utility discount rate—the rate at which our concern for the welfare of future people declines with their distance from us in time—are at the heart of the debate about the appropriate intensity of climate policy. Seemingly small differences in the discount rate yield very different policy prescriptions, and no consensus “correct” value has been identified. We argue that the choice of discount rate is an ethical primitive: there are many different legitimate opinions as to its value, and none should receive a privileged place in economic analysis of climate policy. Rather, we advocate a social choice-based approach in which a diverse set of individual discount rates is aggregated into a “representative” rate. We show that performing this aggregation efficiently leads to a time-dependent discount rate that declines monotonically to the lowest rate in the population. We apply this discounting scheme to calculations of the social cost of carbon recently performed by the US government and show that it provides an attractive compromise between competing ethical positions, and thus provides a possible resolution to the ethical impasse in climate change economics.

Item Type: Article
Official URL:
Additional Information: © 2014 National Academy of Sciences
Divisions: Grantham Research Institute
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
G Geography. Anthropology. Recreation > GF Human ecology. Anthropogeography
J Political Science > JA Political science (General)
Date Deposited: 01 Apr 2014 15:43
Last Modified: 16 May 2024 01:50
Funders: Economic and Social Research Council, Grantham Research Institute on Climate Change and the Environment

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