Climate change and discounting

by Shah, Nihar Kaushik, Ph.D., UNIVERSITY OF CALIFORNIA, BERKELEY, 2008, 47 pages; 3353210


In this dissertation, we discuss the limitations confronting both descriptive and prescriptive approaches to cost-benefit analyses of climate change. Both approaches are incomplete and the debate between the two tracks has hitherto remained unresolved. We interpret recent empirical psychological and behavioral economics evidence as for the first time empirically supporting low discount rates such as the 0.1% discount rate recommended by Stern,[1] thus effectively resolving the discounting debate. A new algorithm is proposed to incorporate ecological limits such as the 550 ppm limit to CO2 emissions explicitly into microeconomic cost-benefit analyses of climate change mitigation policies. We review the recent literature on cybernetics and control information theory to show that it can be used effectively as a metaframework for the analysis of social problems. We also postulate that the control information as defined by control information theorists is the same as the contextual support that psychologists show allow more effective decisionmaking, offering exciting possibilities for future research and applications.

AdviserArun Majumdar
Source TypeDissertation
SubjectsEconomics; Mechanical engineering; System science
Publication Number3353210

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