Positional goods, climate change and the social returns to investment
The economic analysis of global warming is dominated by models based on optimal growth theory. This approach can generate biases in the presence of positional goods and status effects. We show that by ignoring these direct consumption externalities, integrated assessment models overestimate the social return to conventional investment and underestimate the optimal amount of investment in mitigation. Empirical evidence on the influence of relative consumption on utility suggests that the bias could be quantitatively significant. Our results from a simple survey support this conclusion. JEL Categories: Q13, I3, E1
|Date of creation:||Oct 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.umass.edu/economics
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Armon Rezai & Duncan Foley & Lance Taylor, 2012. "Global warming and economic externalities," Economic Theory, Springer, vol. 49(2), pages 329-351, February.
- William D. Nordhaus, 2006. "Principles of National Accounting For Nonmarket Accounts," NBER Chapters, in: A New Architecture for the U.S. National Accounts, pages 143-160 National Bureau of Economic Research, Inc.
- Olivier J. Blanchard, 2008.
"The State of Macro,"
NBER Working Papers
14259, National Bureau of Economic Research, Inc.
- Blanchflower, David G. & Oswald, Andrew J., 2001.
"Well-Being Over Time in Britain and the USA,"
The Warwick Economics Research Paper Series (TWERPS)
616, University of Warwick, Department of Economics.
- Ackerman, Frank & Stanton, Elizabeth A. & Bueno, Ramón, 2013.
"CRED: A new model of climate and development,"
Elsevier, vol. 85(C), pages 166-176.
- Weitzman, Martin L., 2009.
"On Modeling and Interpreting the Economics of Catastrophic Climate Change,"
3693423, Harvard University Department of Economics.
- Martin L. Weitzman, 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 1-19, February.
- Ng, Y.K. & Wang, J., 1993. "A Case for Cardinal Utility and Aritrary Choice of Commodity Units," Papers 93-26, New South Wales - School of Economics.
- Fafchamps, Marcel & Shilpi, Forhad, 2008.
"Subjective welfare, isolation, and relative consumption,"
Journal of Development Economics,
Elsevier, vol. 86(1), pages 43-60, April.
- Marcel Fafchamps & Forhad Shilpi, 2006. "Subjective Welfare, Isolation, and Relative Consumption," Economics Series Working Papers GPRG-WPS-056, University of Oxford, Department of Economics.
- Fafchamps, Marcel & Shilpi, Forhad, 2006. "Subjective Welfare, Isolation and Relative Consumption," CEPR Discussion Papers 6002, C.E.P.R. Discussion Papers.
- Richard Howarth, 2000. "Climate Change and the Representative Agent," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(2), pages 135-148, February.
- Debreu,Gerard Introduction by-Name:Hildenbrand,Werner, 1986. "Mathematical Economics," Cambridge Books, Cambridge University Press, number 9780521335614.
- William D. Nordhaus, 2006. "The "Stern Review" on the Economics of Climate Change," NBER Working Papers 12741, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:ums:papers:2011-24. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Arslan Razmi)
If references are entirely missing, you can add them using this form.