Governments’ evaluations of long-term public projects, including climate change mitigation, are heavily influenced by ``expert” opinions of economists on intergenerational equity, particularly the social discount rate (SDR). Unsurprisingly, economists’ opinions rarely coincide. Furthermore, economists are unlikely to be representative of all relevant opinions. This project will elicit and compare opinions on the SDR and intergenerational equity across different disciplines and the general public, using behavioural experiments adapted to the social context. We will develop methods for reaching decisions when disagreement exists. The project will place the analysis of long-term public policy on firmer theoretical, empirical and ``democratic” ground.
In a first project, we have studied “one of the most critical problems in all of economics” (Weitzman 2001 AER, 260) about which there has been a great deal of disagreement: the long-term social discount rate (SDR) by means of an expert survey. The sample contains over 200 academics who are defined as experts on social discounting by virtue of their publications. A key innovation of our survey is that we elicit information on the fundamental determinants of the SDR, which allows us to disentangle the main sources of disagreement. The experts’ acceptable ranges for the SDR are also elicited, which allows an examination of whether there is any space for agreement on discounting. Our findings lead us to the conclusion that current policy guidance on the evaluation of long-term public projects—such as climate change mitigation and long-lived infrastructure—requires substantial revision, in particular, a departure from the simple, deterministic Ramsey Rule.
In a subsequent project, we apply data on individual discounting determinants to shed light on how the prominent position on welfare weights of the recently minted Nobel Laureate Bill Nordhaus relates to the plausible range of expert opinions and climate policy outcomes and contrast his position with the median expert.
In further studies, we broaden the scope of analysis to other subject pools of potential experts (e.g. philosophers) as well as to the general public, to scrutinise extensions to the standard discounting framework, and to study how to aggregate heterogeneous responses. Overall this aims at providing a firmer evidence base on these crucial social science inputs to climate policy appraisal and governmental cost-benefit analysis.
Zugehörige Publikationen und Arbeitspapiere:
Drupp, M.A., Freeman, M.C., Groom, B. and F. Nesje (2018). Discounting Disentangled. American Economic Journal: Economic Policy 10(4): 109-134.
Drupp, M.A., Freeman, M.C., Groom, B. and F. Nesje (2018). Combining Expert Views on Social Discounting.
Drupp, M.A., Freeman, M.C., Groom, B. and F. Nesje (2018). Rumble in the Jungle? Economists
versus Philosophers on Social Discounting.
Drupp, M.A. (2018). Limits to Substitution between Ecosystem Services and Manufactured Goods and Implications for Social Discounting. Environmental and Resource Economics 69(1): 135-158.
Drupp, M.A. and M.C. Hänsel (2018). Relative Prices and Climate Policy: How the Scarcity of Non-Market Goods Drives Policy Evaluation. University of Kiel Economics Working Paper 2018-01.
Wirtschafts- und Sozialwissenschaften
Juniorprofessur für Volkswirtschaftslehre, insbesondere Umweltökonomik
Prof. Dr. Moritz Drupp
Prof. Ben Groom (LSE), Prof. Mark Freeman (York), Frikk Nesje (Oslo, Heidelberg), Dr. Martin Hänsel (Universität Kiel)