Economic Principals on Stern's Ely Lecture

When was the last time someone mentions environmental economics is the "centerpiece" of the ASSA meetings (Down in New Orleans)?

The annual meetings of the Allied Social Science Association came and went this weekend in New Orleans, ...

But the centerpiece of the convention was a lecture by Nicholas Stern. It is the prerogative of the incoming president, who organizes the meetings, to invite a lecturer to deliver a single plenary address. Avinash Dixit, of Princeton University, chose Stern, long-time professor at Warwick University and the London School of Economics. As adviser to the British government on the economics of climate change and development, Stern recently published an enormous study of global warming that was simultaneously admired for its agenda-setting power and widely criticized by Stern’s fellow economists – Kenneth Arrow, William Nordhaus, Partha Dasgupta and Martin Weitzman among them – for certain of its assumptions about the time horizons and ethical obligations of ordinary human beings, which led ineluctably to his view of the current situation as being one of dire emergency.

Stern’s long and complicated address was masterful, but he did not make available a text, so those who follow this issue closely will have to bide their time to consider in detail what he said. But his basic thrust was clear enough: looking back, he said, he felt his report had underestimated the risks of doing nothing.

I missed the Ely Lecture but I attended the panel session sponsored by AERE. Brave Stern got the first and last words but was forced to sit quietly as a parade of critics ripped the Stern Review subtly and not-so-subtly (I think the words were unconvincing and ..., I can't remember the rest of Weitzman's phrase).

Comments

[Tim Worstall]

"Brave Stern got the first and last words but was forced to sit quietly as a parade of critics ripped the Stern Review subtly and not-so-subtly (I think the words were unconvincing and ..., I can't remember the rest of Weitzman's phrase)."

A transcript of that would be most interesting....

[Charles Young]

Two of the four economists cited as critics of Stern - Arrow and Weitzman - are essentially in agreement with his policy conclusions, though they have a slightly different weighting of the various reasons for reaching those conclusions. Indeed, both Dasgupta and Nordhaus are also in favour of action, though they think (wrongly in my view, but that is another story) that Stern exaggerates the current negative externality of each ton of carbon omitted.

[Jack Schieffer]

I attended both the Ely lecture (Stern only) and the AERE panel (Stern and critics). I thought both were very engaging. To me, it seemed the main bone of contention was Stern's use of a near-zero discount rate, which he based on intergenerational ethics (i.e. not "discriminating on the basis of date of birth" was his phrase, I believe) and on a belief that a pure time preference (rather than considering investment returns) is the appropriate form of discounting.

I also would love a transcript, but even better would be a video, particularly Marty Weitzman's presentation. I wish I had a band, so I could name it "The Fat Tails of Catastrophe."