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Pricing climate change

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  • Partha Dasgupta

Abstract

In developing the basis on which climate change should be priced, I do five things. First, I review the ethical foundations for valuing future consumption relative to present consumption (i.e. social discount rates). Second, I report that the criterion for both assessing and prescribing economic policies should not be an economy's GDP, but an inclusive measure of an economy's wealth adjusted for the distribution of wealth. Third, I apply the resulting analysis to the problem of pricing carbon concentration in the atmosphere. I give prominence to future uncertainties. Fourth, I show that the existing models of human behaviour on the basis of which these questions have been analysed by economists have serious deficiencies, in as much as the idea of personhood embodied in them has been built on the psychology of confirmed egotists. Fifth, I sketch the motivations of a social being and show how the altered specification of the human person affects the social price of climate change.

Suggested Citation

  • Partha Dasgupta, 2014. "Pricing climate change," Politics, Philosophy & Economics, , vol. 13(4), pages 394-416, November.
    • Handle: RePEc:sae:pophec:v:13:y:2014:i:4:p:394-416
    DOI: 10.1177/1470594X14541521
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    References listed on IDEAS

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    1. Dasgupta, Partha & Southerton, Dale & Ulph, Alistair & Ulph, David, 2014. "Consumer Behaviour in a Social Context: Implications for Environmental Policy," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-10, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    8. Arrow, Kenneth J. & Dasgupta, Partha & Goulder, Lawrence H. & Mumford, Kevin J. & Oleson, Kirsten, 2012. "Sustainability and the measurement of wealth," Environment and Development Economics, Cambridge University Press, vol. 17(3), pages 317-353, June.
    9. William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39, April.
    10. Partha Dasgupta & Dale Southerton & Alistair Ulph & David Ulph, 2014. "Consumer Behaviour in a Social Context: Implications for Environmental Policy," Discussion Paper Series, School of Economics and Finance 201407, School of Economics and Finance, University of St Andrews.
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    18. Partha Dasgupta, 2008. "Discounting climate change," Journal of Risk and Uncertainty, Springer, vol. 37(2), pages 141-169, December.
    19. Dasgupta, Partha & Southerton, Dale & Ulph, Alistair & Ulph, David, 2014. "Consumer Behaviour in a Social Context: Implications for Environmental Policy," SIRE Discussion Papers 2015-10, Scottish Institute for Research in Economics (SIRE).
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    22. Dasgupta, Partha, 2004. "Human Well-Being and the Natural Environment," OUP Catalogue, Oxford University Press, number 9780199267194.
    23. Jürgen Maurer & André Meier, 2008. "Smooth it Like the ‘Joneses’? Estimating Peer‐Group Effects in Intertemporal Consumption Choice," Economic Journal, Royal Economic Society, vol. 118(527), pages 454-476, March.
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    27. Arrow, Kenneth J. & Dasgupta, Partha & Goulder, Lawrence H. & Mumford, Kevin J. & Oleson, Kirsten, 2013. "Sustainability and the measurement of wealth: further reflections," Environment and Development Economics, Cambridge University Press, vol. 18(4), pages 504-516, August.
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    Full references (including those not matched with items on IDEAS)

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