Publications

Forthcoming
<p>Climate Shock</p>
Wagner G, Weitzman M.

Climate Shock

. Princeton University Press; Forthcoming. Publisher's Version
2014
Weitzman ML.

Fat Tails and the Social Cost of Carbon

. American Economic Review: Papers & Proceedings [Internet]. 2014;104(5):544-546. Publisher's Version aer.104.5.544fattailsandthesocialcostofcarbon.pdf
Weitzman ML.

Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality?

. Journal of the Association of Environmental and Resource Economists [Internet]. 2014;1(1/2):29-49. Publisher's Version 676039cannegotiatingauniform.pdf
Weitzman ML.

Should Governments Use a Declining Discount Rate in Project Analysis?

. Review of Environmental Economics and Policy [Internet]. 2014;8(2):145-163. Publisher's Version rev_environ_econ_policy-2014-arrow-145-63.pdf
2011
Weitzman M. Fat-Tailed Uncertainty in the Economics of Catastrophic Climate Change. Review of Environmental Economics and Policy. 2011;5(2):275-292. fattaileduncertaintyeconomics.pdf
2010
Weitzman M, Gollier C. How Should the Distant Future be Discounted When Discount Rates are Uncertain?. Economic Letters. 2010;107(3):350-353.Abstract
It is not immediately clear how to discount distant-future events, like climate change, when the distant-future discount rate itself is uncertain. The so-called “Weitzman-Gollier puzzle” is the fact that two seemingly symmetric and equally plausible ways of dealing with uncertain future discount rates appear to give diametrically opposed results with the opposite policy implications. We explain how the “Weitzman-Gollier puzzle” is resolved. When agents optimize their consumption plans and probabilities are adjusted for risk, the two approaches are identical. What we would wish a reader to take away from this paper is the bottom-line message that the appropriate long run discount rate declines over time toward its lowest possible value.
howshoulddistantfuture.pdf
Weitzman M. Book Review of Bjorn Lomborg‟s Smart Solutions to Climate Change: Comparing Costs and Benefits. Nature [Internet]. 2010;467(7317):784-785. Publisher's Version
Weitzman M. Some Dynamic Economic Consequences of the Climate Sensitivity Inference Dilemma. In Aronsson, Lofgren Handbook of Environmental Accounting Edward Elgar; 2010. pp. Chapter 8. somedynamiceconomicconsequences.pdf
Weitzman M. What is the "Damages Function‟ for Global Warming – and What Difference Might it Make?. Climate Change Economics. 2010;1(1):57-69. damagesfunctionglobalwarming.pdf
Weitzman M. Risk-Adjusted Gamma Discounting. Journal of Environmental Economics and Management. 2010;60:1-13. riskadjustedgammadiscounting.pdf
2009
Weitzman M. On Modeling and Interpreting the Economics of Catastrophic Climate Change. Review of Economics and Statistics. 2009;91(1):1-19.Abstract
With climate change as prototype example, this paper analyzes the implications of structural uncertainty for the economics of low probability, high-impact catastrophes. Even when updated by Bayesian learning, uncertain structural parameters induce a critical “tail fattening” of posterior-predictive distributions. Such fattened tails have strong implications for situations, like climate change, where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages. This paper shows that the economic consequences of fat-tailed structural uncertainty (along with unsureness about high-temperature damages) can readily outweigh the effects of discounting in climate-change policy analysis.
modelinginterpretingeconomics.pdf
Weitzman M. Some Basic Economics of Climate Change. In Touffut J-P Changing Climate, Changing Economy Edward Elgar; 2009.Abstract
Climate change is characterized by deep structural uncertainty in the science coupled with an economic inability to evaluate meaningfully the welfare losses from high temperature changes. The probability of a disastrous collapse of planetary welfare from too much CO2 is non-negligible, even if this low probability is not objectively knowable. This paper attempts to explain (in not excessively technical language) some of the most basic issues in modeling the economics of catastrophic climate change. The paper builds to a tentative conclusion that, no matter what else is done realistically to slow CO2 buildups, economic analysis lends some support to undertaking serious research now into the prospects of "fast geoengineering preparedness" - as a state-contingent emergency option offering at least the possibility of knocking down catastrophic temperatures rapidly.
basiceconomicsclimatechange.pdf
Weitzman M. Additive Damages, Fat-Tailed Climate Dynamics, and Uncertain Discounting. Economics. 2009;2009-39.Abstract
This paper in applied theory argues that there is a loose chain of reasoning connecting the following three basic links in the economics of climate change: 1) additive disutility damages may be appropriate for analyzing some impacts of global warming; 2) an uncertain feedback-forcing coefficient, which might be near one with infinitesimal probability, can cause the distribution of the future time trajectory of global temperatures to have fat tails and a high variance; 3) when high-variance additive damages are discounted at an uncertain rate of pure time preference, which might be near zero with infinitesimal probability, it can make expected present discounted disutility very large. Some possible implications for welfare analysis and climate-change policy are briefly noted.
additivedamages.pdf
2007
Weitzman M. Subjective Expectations and Asset-Return Puzzles. American Economic Review. 2007;97(4):1102-1130. subjective-aer.pdf