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Stern and his critics on discounting and climate change

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  • John Quiggin

    (Department of Economics, University of Queensland)

Abstract

This review will focus on the question of discounting. The paper begins with an outline of the expected utility model used in the Stern Review. Next, the question of ‘inherent discounting’, that is, the idea that future outcomes should be discounted simply because they are in the future, is examined, along with the closely related concept of the pure rate of time preference. This discussion forms the basis for an assessment of the approaches to discounting and climate change adopted by the Stern Review and by its critics.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • John Quiggin, 2007. "Stern and his critics on discounting and climate change," Climate Change Working Papers WPC07_1, Risk and Sustainable Management Group, University of Queensland.
    • Handle: RePEc:rsm:climte:c07_1
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    File URL: http://www.uq.edu.au/rsmg/WP/WPC07_1.pdf
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    References listed on IDEAS

    as
    1. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801.
    2. Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
    3. Grant Simon & Quiggin John, 2005. "What Does the Equity Premium Mean?," The Economists' Voice, De Gruyter, vol. 2(4), pages 1-7, September.
    4. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    5. Louis Kaplow, 2005. "The Value of a Statistical Life and the Coefficient of Relative Risk Aversion," Journal of Risk and Uncertainty, Springer, vol. 31(1), pages 23-34, July.
    6. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    7. Gomme, Paul & Rupert, Peter, 2007. "Theory, measurement and calibration of macroeconomic models," Journal of Monetary Economics, Elsevier, vol. 54(2), pages 460-497, March.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Frank Jotzo, 2007. "Climate policy in Australia and globally: where to and how?," Economics and Environment Network Working Papers 0703, Australian National University, Economics and Environment Network.
    2. Simon Dietz & David Maddison, 2009. "New Frontiers in the Economics of Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 295-306, July.
    3. Wang-Helmreich, Hanna & Lochner, Stefan, 2011. "Natural Gas in Road Transportation - A Low-emission Bridging Technology?," EWI Working Papers 2011-14, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    4. Nathalie Lazaric & Kevin Maréchal, 2010. "Overcoming inertia: insights from evolutionary economics into improved energy and climate policy," Post-Print hal-00452205, HAL.
    5. Baum, Seth D., 2009. "Description, prescription and the choice of discount rates," Ecological Economics, Elsevier, vol. 69(1), pages 197-205, November.

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    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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