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Time-Stochastic Dominance and iso-elastic discounted utility functions

Author

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  • Antonin Pottier

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

Abstract

Dietz and Matei (2015) introduce Time-Stochastic Dominance and apply it to evaluate climate-change mitigation. They compute several preferences classes for which mitigation policies are preferred to business-as-usual. The purpose of the present study is to investigate which standard utility functions (with constant time-discount rate and a constant risk aversion) belong to them. The major contribution is to map preferences classes studied by Dietz and Matei (2015) into the space of time-discount rate and elasticity of marginal utility of consumption, space in which the climate debate has been shaped so far.

Suggested Citation

  • Antonin Pottier, 2015. "Time-Stochastic Dominance and iso-elastic discounted utility functions," Working Papers hal-01185848, HAL.
    • Handle: RePEc:hal:wpaper:hal-01185848
    Note: View the original document on HAL open archive server: https://hal.science/hal-01185848v1
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    File URL: https://hal.science/hal-01185848v1/document
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    References listed on IDEAS

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    1. William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39, April.
    2. Martin L. Weitzman, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 703-724, September.
    3. Simon Dietz & Anca N. Matei, 2013. "Spaces for agreement: a theory of Time-Stochastic Dominance," GRI Working Papers 137, Grantham Research Institute on Climate Change and the Environment.
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    Cited by:

    1. Simon Dietz & Nicoleta Anca Matei, 2016. "Spaces for Agreement: A Theory of Time-Stochastic Dominance and an Application to Climate Change," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(1), pages 85-130.
    2. Nekeisha Spencer & Eric Strobl, 2020. "Hurricanes, climate change, and social welfare: evidence from the Caribbean," Climatic Change, Springer, vol. 163(1), pages 337-357, November.

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    Keywords

    time-stochastic dominance; climate change; discounting;
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