Publications

2010
Weitzman ML, Gollier C. How Should the Distant Future be Discounted When Discount Rates are Uncertain?. Economic Letters. 2010;107 (3) :350-353. Publisher's VersionAbstract

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 ML. Some Dynamic Economic Consequences of the Climate Sensitivity Inference Dilemma. In: Aronsson T, Lofgren K-G Handbook of Environmental Accounting. Edward Elgar ; 2010. pp. Chapter 8. Publisher's Version somedynamiceconomicconsequences.pdf
Weitzman ML. What is the "Damages Function" for Global Warming – and What Difference Might it Make?. Climate Change Economics. 2010;1 (1) :57-69. Publisher's Version damagesfunctionglobalwarming.pdf
Weitzman ML. Risk-Adjusted Gamma Discounting. Journal of Environmental Economics and Management. 2010;60 :1-13. Publisher's Version riskadjustedgammadiscounting.pdf
Weitzman ML. Book Review of Bjorn Lomborg‟s Smart Solutions to Climate Change: Comparing Costs and Benefits. Nature. 2010;467 (7317) :784-785. Publisher's Version 467784a.pdf
2009
Weitzman ML. On Modeling and Interpreting the Economics of Catastrophic Climate Change. Review of Economics and Statistics. 2009;91 (1) :1-19. Publisher's VersionAbstract

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 ML. Additive Damages, Fat-Tailed Climate Dynamics, and Uncertain Discounting. Economics. 2009;2009-39. Publisher's VersionAbstract

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
Weitzman ML. Some Basic Economics of Climate Change. In: Touffut J-P Changing Climate, Changing Economy. Edward Elgar ; 2009. Publisher's VersionAbstract

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.

heep_discussion_10.pdf
2007
Weitzman ML. Subjective Expectations and Asset-Return Puzzles. American Economic Review. 2007;97 (4) :1102-1130. Publisher's Version subjective-aer.pdf
Weitzman ML. A Review of The Stern Review on the Economics of Climate Change. Journal of Economic Literature. 2007;45 (3) :703-724. Publisher's Version review_of_stern_review_jel.45.3.pdf
2006
Weitzman ML. Trees vs. Fish, or Discrete vs. Continuous Havesting. In: Aronsson T, Axelsson R, Brännlund R The Theory and Practice of Environmental and Resource Economics, Essays in Honour of Karl-Gustaf Löfgren, New Horizons in Environmental Economics series. Cheltenham: Edward Elgar ; 2006. Publisher's Version treesvsfish.pdf
2005
Weitzman ML. The Bose Model and National Income. In: Lahari S, Maiti P Economic Theory in a Changing World: Policymaking for Growth. Oxford: Oxford University Press ; 2005. pp. 17-26. bosemodelnationalincome.pdf
2004
Weitzman ML. Stochastic Income and Wealth. Japan and the World Economy. 2004;16 :277-301. Publisher's Version stochasticincomewealth.pdf
2003
Income, Wealth, and the Maximum Principle
Weitzman ML. Income, Wealth, and the Maximum Principle. Cambridge, MA: Harvard University Press; 2003. Publisher's Version
Weitzman ML. Value of Treatment Heterogeneity for Infectious Diseases. In: Laxminarayan R Battling Resistance to Antibiotics and Pesticides. Washington, D.C. Resources for the Future ; 2003. pp. Chapter 3. Publisher's Version valuetreatmentheterogeneity.pdf
2002
Weitzman ML. Landing Fees vs. Harvest Quotas with Uncertain Fish Stocks. Journal of Environmental Economics and Management. 2002;43 :325-338. Publisher's Version landing_fees.pdf
Weitzman ML, Laximanarayan R. On the Implications of Endogenous Resistance to Medications. Journal of Health Economics. 2002;21 :709-718. Publisher's Version implicationsendogenousresistance.pdf
Weitzman ML, Gylfason T. Icelandic Fisheries Management: Fees vs. Quotas, in Conference on Small Island Economies. Cambridge, MA: Center for International Development, Harvard University ; 2002. T. Gylfason's websiteAbstract

We discuss the quota system by which Iceland’s fisheries have been managed since 1984, and explore its implications for economic efficiency as well as fairness. We argue that the shortcomings of the Icelandic quota system are inherent in any type of quota system applied to high-seas fishing. Further, we find that regulating access to a limited, stochastic common-property natural resource such as Iceland’s fish by fee rather than by quota – i.e., by relying on price incentives rather than quantitative restrictions – would constitute a more equitable and more efficient solution to the fisheries management problem. Our argument applies to the management of all openseas fisheries, including the Common Fisheries Policy of the European Union.

Presented at a conference on Small Island Economies at Harvard University, Center for International Development, 20 May 2002, and circulated as CEPR Discussion Paper No. 3849, March 2003. 

2001
Weitzman ML. Gamma Discounting. American Economic Review. 2001;91 (1) :260-271. Publisher's Version gamma_discounting.pdf
Weitzman ML, Löfgren K-G, Li C-Z. Harvesting versus Biodiversity: An Occam's Razor Version. Environmental and Resource Economics. 2001;18 (4) :355-366. Publisher's Version harvesting_versus_biodiversity.pdf

Pages