Born on April Fool's Day in 1942, Martin Weitzman died yesterday on August 27, 2019 at age 77. Several of us here had long advocated that he share the first Nobel Prize to be given for environmental economics. That award seems to have been given last fall, but only William Nordhaus got it for environmental while Paul Romer shared the prize for endogenous growth theory. Mary missed out unfortunately, even though many of us think his work was more important than Nordhaus's. But he was always further out on the edge of respectability, even though his career always looked respectable on the surface: a PhD from MIT under Robert Solow and holding positions at Yale, MIT, and Harvard since 1989, as well as regularly publishing in top journals from 1965 on.
While he has been most famous for his work on environmental economics, early in his career in which he dealt with a wide range of issues, he was very heavily involved with comparative economics, with numerous papers on Soviet planning (he got a masters in operations research from Stanford in 1964), Marxian views on managing common resources, and most famously an advocate of "the share economy," about which he wrote a highly influential book in 1984.
His 1974 paper in the QJE, "Prices and Quantities," may have proven to be his most influential of all over his career, and was brought up on this blog in January in posts about the petition by many economists to impose a carbon tax without any mention of possible use of a cap and trade solution. Marty was among those not signing that petition. This famous paper reasonably argued that in a world of non-certainty regarding costs and benefits of environmental policies, the use of a tax versus a quantity control such as cap and trade depended on the relative slopes of the marginal cost and marginal damage functions. If the former is steeper then a price-oriented policy such as a tax is preferred whereas if the marginal damage function is steeper than a quantity-oriented policy such as cap and trade would be preferred. Regarding global climate many of us think the latter is the case, which may explain why Weitzman did not join the petition signers.
A less well known idea he was one of the first to advocate and continues to is that policymakers doing cost-benefit analysis involving long time horizons such as those involved in global warming it is preferable to use different discount rates for different time horizons, in particular using higher discount rates for shorter time horizons for efficiency reasons by lower rates for longer time horizons out of concerns for intertemporal equity. I think this idea has not gotten the attention it deserves partly because there is not an agreed name for this. In his first paper on it in JEEM in 1994 he called it an "environmental discount rate." In 2002 he would more famously call it "gamma discounting." He was slightly edged in 1993 by Graciela Chichilnisky and her then-husband Geoffrey Heal who called it "the green golden rule" for the idea that present people should not exploit future people (by only using overly high discount rates) while future people should not exploit present people (by the use only of overly low discount rates). Most recently in a 2015 paper with Arrow, Heal, Nordhaus, and several others, Weitzman simply called it "a declining discount rate," which may catch on in its boring neutrality. I have thought this was a great idea since I first encountered it, and some policymakers have adopted it. But I fear it has gotten less attention partly because there is not an agreed upon way of pinning down exactly how the rate should decline for such analysis.
Finally in the last decade or so he had been emphasizing the problem that the distribution of climate outcomes is likely to have fat tails and noting that most of the standard analysis in IPCC reports (largely supported by Nordhaus) assumed Gaussian distributions lacking these kurtotic fat tails. This is an important matter. If the distribution is Guassian, then the probability of possibly extremely high increases in world temperature are almost infinitesimal and can really be ignored. However, assuming a Pareto or other fat tailed distribution, those probabilities increase sharply, getting into the level of one percent or more, This remains probably too low to really affect politics or policy, but it is more salient and serious than one in a trillion.
Martin Weitzman's death is a real loss. May he rest in peace.
Weitzman's work on climate is extremely important. How many people would board an airplane if there was "only" a one percent chance it would crash? The same prudence should apply to the probability of catastrophic rise in global temperature.
Part of the problem is that the agent deciding whether to board the plane is not the same individual who will actually have to board the plane. I might not want to board that plane with a 1 percent chance of crashing, but I also might not have any qualms about asking a perfect stranger to board to it. If we were all infinitely lived, then we would care about how the decisions we make today will affect us 100 years from now. But voters and consumers are mortal, myopic and heavily discount the concerns of future generations. The current generation absorbs all of the benefits of GHG emissions but is unlikely to face any of the costs that will be borne by future generations of strangers.
A thousand years ago medieval communities would build cathedrals that would take four or five generations to complete. People who started building those cathedrals knew perfectly well that they would never live to see the project completed. And they knew that their children, grandchildren and great-grandchildren probably wouldn't see it finished. Today I don't see any similar level of intergenerational substitution of consumption. Instead I see big gas guzzling RVs rolling down the highway with bumper stickers telling me that the folks inside that RV are spending their grandchildren's inheritance.
This is way off-topic, but I have received an email from someone who read thiis post who reported to me that a link we supposedly have here, which I have not even seen, apparently goes to a Japanese porn site. So, if you see that link, please do not use it unless you are interested in Japanese porn. I am sorry about this but note that I do not manage these links.
Yes, 2slugsbaits, that is precisely the ethical problem Andreas Malm refers to, citing Stephen Gardiner. The people who will have to face the most severe consequences of our emissions today aren't even born yet. We can enjoy all the benefits of fossil fuels. And we can't really do anything about current effects that result from past emissions.
Dorian is such a great name for a hurricane because it evokes the Oscar Wilde story where the evidence of Dorian Grey's dissipated life is hidden away in a closet. It is forecast to be an extraordinarily slow-moving category 4 storm. The significance of that is that the slow movement is characteristic of global warming and the consequences are likely to be inordinate rainfall levels.
Comment on Barkley Rosser on ‘Martin Weitzman RIP’
The failed scientist and applause troll, attention/reputation manager, political agenda pusher, crime hunter, academic busybody, storyteller, and falsifier of the history of economic thought Barkley Rosser takes the opportunity to erect the next False-Hero-Memorial.
These are Barkley Rosser’s quality criteria: “But he was always further out on the edge of respectability, even though his career always looked respectable on the surface: a PhD from MIT under Robert Solow and holding positions at Yale, MIT, and Harvard since 1989, as well as regularly publishing in top journals from 1965 on.”
This translates into: During his academic career he was most of the time either indirectly or directly on the payroll of billionaire-sponsors.#1
What about contributions of real scientific worth?
“This famous paper reasonably argued that in a world of non-certainty regarding costs and benefits of environmental policies, the use of a tax versus a quantity control such as cap and trade depended on the relative slopes of the marginal cost and marginal damage functions. If the former is steeper then a price-oriented policy such as a tax is preferred whereas if the marginal damage function is steeper than a quantity-oriented policy such as cap and trade would be preferred.”
This translates into Martin Weitzman never realized that Marginalism and the Totem-of-the-Micro are proto-scientific garbage since Jevons/Walras/Menger.#2
With all these credentials, Martin Weitzman was, of course, a worthy candidate for the Faux Nobel: “Several of us here had long advocated that he share the first Nobel Prize to be given for environmental economics.”#3
Yes, obituaries have always been the best place to plant myths. And nobody does this better than Barkley Rosser, the promoter of fake science and suppressor of genuine science.
For the scientific community it holds vis-a-vis all cargo cult scientists: RIP at the Flat-Earth-Cemetery.
#1 “MIT is giving Jeffrey Epstein’s tainted donation to a charity, but Harvard says it won’t do the same”. Twitter
#2 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#3 Links on the Economics Nobel
Egmont, your vacuous profit law is completely irrelevant to whether or not marginal social cost curves or marginal social damage curves regarding environmental problems are usuful or meaningful concepts. As it is they look to be meaningful and relevant to the issue of whether global warming is better addressed by using taxes or some kind of quantity control.
This debate is a very real and serious policy debate. What do you have to contribute to it? Are you a global warming denier like Donald Trump? Your vacuous "profit law" is totally useless in addressing this very serious problem facing the world. Your whining about this is not only useless, it is, frankly, kink of disgusting. Shall we just sit on our hands and do nothing because you do not like Marginalism for reasons you have not stated?
BTW, Egmont, if you want to dump on somebody regarding environmental economics I would suggest you go after the guy who did get the Nobel, the extremely conventional William Nordhaus, who has had the chutzpah to claim to have made seriusly reasonable estimates of these curves precisely enough to actually come up with a price for carbon. This goes far beyond simply estimating which curve is steeper than the other and involves making a lot of more than heroic assumptions, many of them highly questionable. But the authors of thr UN's IPCC found his oh so precise numbers appealing.
As it is, it looks as I said that the marginal social damage curve regarding climate is steeper than the marginal social cost curve, which according to Weitzman's eminently reasonable analysis from 1974 that I have seen nobody refute or even seriously question (certainly not you, Egmont, with your half-baked sloaneering), that would suggest quantity controls would be superior to taxes. But Nordhaus has been a leader of this fashionable mob out there pushing taxes, which some of us here have questioned, relying on Weitzman's analysis precisely for doing so.
You, however, have a big fat zero of any use to contriibute to this discussion beyond silly name calling and vacuous and useless asseetions (along with your by now outright insane claim to be the only truly scientific economist to have ever lived).
You say: “Egmont, your vacuous profit law is completely irrelevant to whether or not marginal social cost curves or marginal social damage curves regarding environmental problems are usuful or meaningful concepts.”
The Profit Law is not at issue in the given context. What is at issue is the irrelevance of Marginalism which is already dead for 140+ years because it consists of plain NONENTITIES. So, the question “whether global warming is better addressed by using taxes or some kind of quantity control” is at the same level as How many angels can dance on a pinpoint?
Standard economics is based on these hardcore propositions: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)
This set is shock-full of NONENTITIES. The whole of Marginalism derives from the core behavioral assumption HC2 which is a NONENTITY like the Tooth Fairy or the Easter Bunny. From the Walrasian axioms, the triad SS-function―DD-function―equilibrium is derived. Leijonhufvud called this defective analytical tool Totem of the Micro/Totem of the Macro. Because there is NO such thing as supply-demand-equilibrium the whole of economics is vacuous.
It is plain to every person with more than two brain cells that any analysis that crosses an upward-sloping and a downward-sloping curve is proto-scientific idiocy. So, every economist who blathers about “relative slopes of the marginal cost and marginal damage functions” is either stupid or corrupt or both.
Global warming is an issue for scientists. It is generally known by now that economists are fake scientists, so they have NOTHING to contribute to the discussion. Actually, global warming is used by academic economists under the label of Green New Deal to deceive WeThePeople.#1, #2 Instead of defunct microfoundations, MMTers apply macrofoundations that are dead since Keynes. Both microfoundations and macrofoundations are provably false, so economists have NOTHING to add to a scientific discussion.
If you were a scientist you would not push for the erection of False-Hero-Memorials but instead, push for the end of the 200+ years mob rule of incompetent scientists and political fraudsters.
#1 MMT and the Green New Deal: Where is the snag? (I)+(II)
#2 Bill Mitchell’s dishonorable discharge from the sciences
Wrong, Egmont, and you capitalizing "NONENTIIES" sows you are getting desperate. In fact we have good information on what the marginsal costs and damagees are, and our knowing them does not in the least guarantee that anybody is actually optimizing, as you inaccurately claimed above.
Turning the very real policy issue of taxes versus cap and trade to "real scientists" is a joke. We have seen climatologist James Hansen make a complete fool of himself at Paris jumping ignorantly on the carbon tax bandwagon, while denouncing cap and trade as "capitalist." Carbon taxes are just as capitalist as cap and trade, which any economist who knows anything can tell him.
“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)
Fact is that both microfounded and macrofounded economics is provably false. Economists do not know how the monetary economy works. There is no valid Employment-, Profit-, Distribution-, or Money Theory. So, economic policy guidance NEVER had sound scientific foundations since the days of Adam Smith.
Fact is that the so-called free market economy is on the life support of the State and Wall Street is on the life support of the Central Bank. Macroeconomic profit is in the main produced by public deficits. Financial wealth grows in lockstep with public debt. The Oligarchy, in turn, uses the opulent free lunches to corrupt what remains of the State’s legislative, executive, and judiciary institutions.
The proof has been given that economists are too stupid for the elementary math that underlies macroeconomics.#1 Because macroeconomics and microeconomics are materially/formally inconsistent economists have NOTHING to contribute to the solution of any problems between unemployment and global warming.
So, what is lacking in economics is the true theory. Economics is a scientific failure. This is bad enough. But then comes absurdity on top of the all the proto-scientific garbage which consists of rewarding fake scientists with the faux Nobel.
#1 Deficit cheerleaders ― the Oligarchy’s useful idiots, Aug 27
This will be my last post on this thread.
Let us get real. There is a very serious problem known as global warming. Do you deny that it exists? There has been long debate and actual attempts at policy implementation regarding whether or not using taxes or a cap and trad policy is best for dealing with it, gand not just it but other pollution issues that are serious and affect things like human health, among many other things.
Now you seem to suggest that because economists do not buy your wacko profit theory they can say nothing about this serious policy question, taxes vs cap and trade. But if economists are not the proper people to decide what to do about this extremely important issue, then who is? You? Your idiotic profit theory has a big fart zero to say about it.
Again, when others have addressed it, like "Real Scientist" James Hansen, he has made a rank ass of himself out of his severe ignorance.
I have just learned via his New York Times obit that Marty Weitzman hanged himself, a suicide, reportedly depressed at his not gwtting the Nobel Prize and making a math error in an unpublished, circulates paper this spring. This is just too depressing.
You say: “Let us get real. There is a very serious problem known as global warming. Do you deny that it exists?”
I say: Let us get real. There is a very serious problem in economics of scientific failure/fake/fraud. Do you deny that it exists?
You abuse an obituary to distract from the fact that economists have to this day no valid theory about how the economy works and that they are too stupid for the elementary math that underlies macroeconomics and that their policy guidance has no sound scientific foundations since Adam Smith. Instead, you portray economists as saviors of the planet and humanity.
Economics is not a science. Economists are incompetent scientists. Martin Weitzman was part of an institutional system that is rigged from textbooks to peer review to the faux Nobel. Do you deny that it exists and that you, too, are part of it?
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