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DISCOUNTING AND CLIMATE CHANGE POLICY AgEcon
Karp, Larry S.; Tsur, Yacov.
A constant social discount rate cannot reflect both a reasonable opportunity cost of public funds and an ethically defensible concern for generations in the distant future. We use a model of hyperbolic discounting that achieves both goals. We imbed this discounting model in a simple climate change model to calculate constant equivalent discount rates" and plausible levels of expenditure to control climate change. We compare these results to discounting assumptions and policy recommendations in the Stern Review on Climate Change.
Tipo: Working or Discussion Paper Palavras-chave: Discounting; Climate change modeling; Stern Review; Markov Perfect Equilibria; Environmental Economics and Policy; C61; C73; D63; D99; Q54.
Ano: 2007 URL: http://purl.umn.edu/7149
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Time perspective and climate change policy AgEcon
Karp, Larry S.; Tsur, Yacov.
The tendency to foreshorten time units as we peer further into the future provides an explanation for hyperbolic discounting at an intergenerational time scale. We study implications of hyperbolic discounting for climate change policy, when the probability of a climate-induced catastrophe depends on the stock of greenhouse gasses. We provide a positive analysis by characterizing the set of Markov perfect equilibria (MPE) of the intergenerational game amongst a succession of policymakers. Each policymaker reflects her generation’s preferences, including its hyperbolic discounting. For a binary action game, we compare the MPE set to a “restricted commitment” benchmark. We compare the associated “constant equivalent discount rates” and the willingness to pay...
Tipo: Working or Discussion Paper Palavras-chave: Hyperbolic discounting; Markov Perfect Equilibria; Catastrophic climate change; Uncertainty; Environmental Economics and Policy; Resource /Energy Economics and Policy; C61; C73; D63; D99; Q54.
Ano: 2008 URL: http://purl.umn.edu/42848
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CLIMATE POLICY WHEN THE DISTANT FUTURE MATTERS: CATASTROPHIC EVENTS WITH HYPERBOLIC DISCOUNTING AgEcon
Karp, Larry S.; Tsur, Yacov.
Low probability catastrophic climate change can have a signifcant influence on policy under hyperbolic discounting. We compare the set of Markov Perfect Equilibria (MPE) to the optimal policy under time-consistent commitment. For some initial levels of risk there are multiple MPE; these may involve either excessive or insufficient stabilization effort. These results imply that even if the free-rider problem amongst contemporaneous decision-makers were solved, there may remain a coordination problem amongst successive generations of decision-makers. A numerical example shows that under plausible conditions society should respond vigorously to the threat of climate change.
Tipo: Working or Discussion Paper Palavras-chave: Abrupt climate change; Event uncertainty; Catastrophic risk; Hyperbolic discounting; Markov Perfect Equilibria; Environmental Economics and Policy; C61; C73; D63; D99; Q54.
Ano: 2007 URL: http://purl.umn.edu/7181
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Poverty and Distribution: Twenty Years Ago and Now AgEcon
Kanbur, Ravi.
This paper adopts the “Rip Van Winkle” stratagem, of asking what differences would be noticed, in the domain of poverty and distribution, by someone who fell asleep in 1987 (the year I published my paper on poverty in the IMF Staff Papers, and woke up only in 2007 (the year I visited the IMF to work on the present paper). I highlight, somewhat idiosyncratically, ten such differences under three broad headings: Facts and Empirics, Concepts and Theory, and Policies and Interventions.
Tipo: Working or Discussion Paper Palavras-chave: Poverty; Income Distribution; Development; Community/Rural/Urban Development; International Development; D31; D63; I32; I38; O15.
Ano: 2009 URL: http://purl.umn.edu/48918
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How to Make Institutional Economics Policy-Relevant: Theoretical Considerations and an Application to Rural Credit Markets in Developing Countries AgEcon
Petrick, Martin.
Welfare economics as the traditional, prescriptive theory framework used in agricultural economics has been criticised by institutional economists as being largely irrelevant to real-world policy issues. We therefore ask how normative statements are possible within an economic theory framework that does recognise the importance of institutional arrangements. Instead of applying established outcome-oriented criteria of social welfare, we examine whether the rules of economic interaction allow the acquisition of gains from cooperation. We suggest to reconstruct any interaction as an existing or repealed social dilemma. This approach helps to identify common rule interests which create room for improvement of all parties involved, and to suggest desirable...
Tipo: Conference Paper or Presentation Palavras-chave: Agricultural Finance; Institutional and Behavioral Economics; D02; D63; D74; Q14.
Ano: 2006 URL: http://purl.umn.edu/25702
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The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (Previously titled: Cultural Transmission and the Pendulum of Economic Systems: The Case of Communism) AgEcon
Farvaque, Etienne; Mihailov, Alexander; Naghavi, Alireza.
Current version uploaded April 2013.
Tipo: Working or Discussion Paper Palavras-chave: Capitalism; Communism; Inequality; Inefficiency; Ideological Transmission; Economic Transitions; C72; D31; D63; D74; D83; P51.
Ano: 2011 URL: http://purl.umn.edu/116909
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Sustainable Decision-making: The State of the Art from an Economics Perspective AgEcon
Toman, Michael.
Government, corporate and other decision makers are more and more often being urged to 'act sustainably' and to pursue policy paths toward 'sustainable development.' However, application of these concepts is hampered by serious interdisciplinary disagreements about the interactions of humans with their environment. Moreover, reducing disagreements about sustainability cannot be achieved solely through an improvement in scientific knowledge. These observations lead me to express skepticism about the capacity of any more or less mechanistic rule, economic, scientific or otherwise, to provide definitive and reliable answers about sustainable policies or conduct. However, there are processes and procedures that can help guide decision-making. I underscore the...
Tipo: Working or Discussion Paper Palavras-chave: Sustainable development; Cost-benefit analysis; Intergenerational equity; Multicriteria analysis; Social values; Institutional and Behavioral Economics; A12; A13; B41; D61; D63; H43; Q28.
Ano: 1998 URL: http://purl.umn.edu/10602
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Sacrifice, discounting and climate policy: five questions AgEcon
Karp, Larry S..
I provide a selective review of discounting and climate policy. After reviewing evidence on the importance of the discount rate in setting policy, I ask whether standard models tend to exaggerate the sacrifices that the current generation needs to undertake in order to internalize climate damages. I then consider whether the risk of catastrophic damage really overwhelms discounting, in the determination of optimal policy. I revisit the question of how we actually think about the distant future.
Tipo: Working or Discussion Paper Palavras-chave: Climate change; Discounting; Intergenerational conflict; Catastrophic risk; Hyperbolic discounting; Environmental Economics and Policy; Research Methods/ Statistical Methods; Resource /Energy Economics and Policy; C61; C73; D63; D99; Q54.
Ano: 2009 URL: http://purl.umn.edu/51612
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Equity and Justice in Global Warming Policy AgEcon
Kverndokk, Snorre; Rose, Adam Z..
Many countries are implementing or at least considering policies to counter increasingly certain negative impacts from climate change. An increasing amount of research has been devoted to the analysis of the costs of climate change and its mitigation, as well as to the design of policies, such as the international Kyoto Protocol, post-Kyoto negotiations, regional initiatives, and unilateral actions. Although most studies on climate change policies in economics have considered efficiency aspects, there is a growing literature on equity and justice. Climate change policy has important dimensions of distributive justice, both within and across generations, but in this paper we survey only studies on the intragenerational aspect, i.e., within a generation. We...
Tipo: Working or Discussion Paper Palavras-chave: Economics of Climate Change; Intragenerational Equity; Distributive Justice; Environmental Economics and Policy; D62; D63; H23; H41; Q00.
Ano: 2008 URL: http://purl.umn.edu/44230
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Sustainability and Optimality in Economic Development: Theoretical Insights and Policy Prospects AgEcon
Farzin, Y. Hossein.
This paper takes sustainability to be a matter of intergenerational welfare equality and examines whether an optimal development path can also be sustainable. It argues that the general “zero-net-aggregate-investment” condition for an optimal development path to be sustainable in the sense of the maximin criterion of intergenerational justice is too demanding to be practical, especially in the context of developing countries. The maximin criterion of sustainability may be more appealing to the rich advanced industrial countries, but is too costly and ethically unreasonable for developing nations as it would act as an intergenerational “poverty equalizer”. The paper suggests that a compromise development policy that follows the optimal growth approach but...
Tipo: Working or Discussion Paper Palavras-chave: Sustainability; Intergenerational equity; Optimality; Discounting; Development policy; International Development; Q01; Q56; O21; O13; D62; D63.
Ano: 2007 URL: http://purl.umn.edu/7447
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Applying Experimental Economics to Obesity in the Family Household AgEcon
Ehmke, Mariah D.; Warziniack, Travis; Schroeter, Christiane; Morgan, Kari.
The objective of this study is to identify experimental economic tools that can be employed to explain the role of economic behavior in overweight and obesity in the household. We identify three economic experiments that can be used to understand how parent-child economic relationships relate to obesity. Loss aversion experiments are discussed as a tool to understand challenges some individuals face in achieving a healthy diet. Finally, testbed experiments are introduced as a means to test and understand new policies and incentives for better health at the household level.
Tipo: Journal Article Palavras-chave: Carrot stick; Child obesity; Discount rate; Generosity; Loss aversion; Parent-child; Punishment; Trust; Agribusiness; Food Consumption/Nutrition/Food Safety; Research Methods/ Statistical Methods; I19; Q18; D01; D63.
Ano: 2008 URL: http://purl.umn.edu/47198
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Blood for Social Status: Preliminary Evidence from Rural China AgEcon
Chen, Xi; Zhang, Xiaobo.
Xi Chen acknowledges generous Doctoral Research Grant from the Institute for the Social Sciences at Cornell University and precious data set provided by the Development Strategy and Governance Division at IFPRI. Conference Travel Grant provided by the Department of Applied Economics and Management at Cornell is also acknowledged. We are grateful to Ravi Kanbur for invaluable comments, guidance and encouragement. This paper also benefited from helpful discussion and invaluable comments from Robert Frank, David Sahn, Marc Rockmore, and seminar participants in the Department of Economics at Cornell. Due to time limit, I have not incorporated all helpful comments and suggestions in this early draft paper. The views expressed herein and any remaining errors...
Tipo: Conference Paper or Presentation Palavras-chave: Blood Donation; Social Status; Poverty; Inequality; Relative Deprivation; Rural China; Agricultural and Food Policy; Community/Rural/Urban Development; Consumer/Household Economics; Demand and Price Analysis; Health Economics and Policy; Institutional and Behavioral Economics; International Development; Labor and Human Capital; Political Economy; Production Economics; Public Economics; Research Methods/ Statistical Methods; Risk and Uncertainty; I32; J22; D13; D63.
Ano: 2009 URL: http://purl.umn.edu/49411
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Do Environmental Services Buyers Prefer Differentiated Rates? A Case Study from the Colombian Andes AgEcon
Moreno-Sanchez, Rocio del Pilar; Maldonado, Jorge Higinio; Wunder, Sven; Borda, Carlos Andres.
Flat user fees in payment for environmental services (PES) schemes promote administrative ease, and are sometimes perceived as egalitarian. However, when environmental service (ES) buyers are heterogeneous in their income and water consumption levels, this may not be optimal, as total payments become too low and services are under-supplied. This paper identifies ES buyer preferences and estimates their willingness to pay (WTP) differentiated fees in an ongoing PES initiative in an Andean watershed in Colombia. Small, flat user payments have recently been introduced to implement incipient watershed protection upstream. Environmental service users fall into two highly heterogeneous categories: smallholder peasants and owners of recreational houses. We...
Tipo: Working or Discussion Paper Palavras-chave: PES; WTP; Environmental services; Colombia; Watershed protection; Community/Rural/Urban Development; Demand and Price Analysis; Resource /Energy Economics and Policy; Q56; Q25; Q5; Q51; C25; D10; D12; D61; D63.
Ano: 2009 URL: http://purl.umn.edu/91171
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Economic Uncertainties in Valuing Reductions in Children's Environmental Health Risks AgEcon
Hoffmann, Sandra A.; Krupnick, Alan J.; Adamowicz, Wiktor L..
The recognition that environmental hazards can affect children differently and more severely than adults has provoked growing concern in industrialized nations about the impact of environmental pollution on children's health. In this paper, commissioned by the OECD, we are charged with examining "economic uncertainties" associated with valuing the benefits of environmental policies that reduce risk to children's health. We examine two sources of uncertainty in benefits estimation: forecasting uncertainty and modeling uncertainty. We explore how these sources of uncertainty affect the use of standard economic and non-economic approaches to the valuation of health benefits. These include willingness-to-pay measures, cost-of-illness and human-capital...
Tipo: Working or Discussion Paper Palavras-chave: Willingness to pay; QALY; Children; Social welfare function; Health valuation; Environmental health; Household behavior; Environmental Economics and Policy; Q51; I18; I1; J17; D13; D6; D63; D64.
Ano: 2005 URL: http://purl.umn.edu/10722
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Welfare and Distribution Effects of Water Pricing Policies AgEcon
Ruijs, Arjan.
In this paper, distribution and welfare effects of changes in block price systems are evaluated. A method is discussed to determine, for a Marshallian demand function, equivalent variation in case of a block price system. The method is applied to analyze welfare and distribution effects of changing water prices in the Metropolitan Region of São Paulo. Results show that there is a trade off between average welfare and income distribution. A pro-poor price system may result in lower average welfare than a flat price system, but in higher individual welfare for the poor. Moreover, there is a trade off between revenues for the water company and income distribution. Even though pro-poor price systems may not be as good for average welfare as flat price systems,...
Tipo: Working or Discussion Paper Palavras-chave: Water demand; Welfare economics; Equivalent variation; Food Security and Poverty; Resource /Energy Economics and Policy; D63; Q25; Q56.
Ano: 2007 URL: http://purl.umn.edu/7441
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Policy responses to a dark side of the integration of regions and nations AgEcon
Stark, Oded.
In this paper I study policy responses to an increase in post-merger distress. I consider the integration of regions and nations as a merger of populations which I view as a revision of social space, and I identify the effect of the merger on aggregate distress. The paper is based on the premise that the merger of groups of people alters their social landscape and their comparators. Employing a specific measure of social distress that is based on the sensing of relative deprivation, a merger increases aggregate distress: the social distress of a merged population is greater than the sum of the social distress of the constituent populations when apart. In response, policies are enacted to ensure that aggregate distress and/or that of individuals does not...
Tipo: Working Paper Palavras-chave: Merger of populations; Revision of social space; Aggregate relative deprivation; Societal distress; Policy responses; Community/Rural/Urban Development; Labor and Human Capital; D04; D63; F55; H53; P51.
Ano: 2012 URL: http://purl.umn.edu/122036
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Agriculture’s Multifunctionality, Sustainability, and Social Responsibility AgEcon
Hediger, Werner.
We investigate the question whether the concept of corporate social responsibility (CSR) could be used to replace or complement those of multifunctionality and sustainability in the agri-food sector. It shows that the double role of citizens as tax payers and customers requests and allows us to directly link the problems of governance and stakeholder society in an intertemporal framework of total value maximisation and sustainable development. Thus, the concept of CSR provides a link between the views on agriculture’s multifunctionality and sustainability. Moreover, the fact that some actors in a vertical market, such as the agri-food chain, can exercise market power and absorb tax money and resource rents enforces the need of a broader perspective which...
Tipo: Conference Paper or Presentation Palavras-chave: Agricultural policy; Multifunctionality; Sustainability; Social responsibility; Market power.; D62; D63; Q01; Q18.
Ano: 2008 URL: http://purl.umn.edu/36854
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Torts and the Protection of "Legally Recognized" Interests AgEcon
Hoffmann, Sandra A.; Hanemann, W. Michael.
The law of torts plays an important role in completing the legal property rights system by defining the extent to which property is protected from harm. It does this by defining the kinds of interests that will be recognized and protected from harm by the courts, the duty of care owed these recognized interests by others, and the manner in which they will be protected through monetary compensation, restitution, or injunction. Together, these three elements of torts define a right in the "bundle of rights" that constitute property. In this paper, we develop a systematic approach to formalizing the nature of the property rights protected by tort law. We use this approach to reexamine the literature on compensation for nonpecuniary damages. This reexamination...
Tipo: Working or Discussion Paper Palavras-chave: Torts; Property rights; Liability; Compensation; Damages; Insurance; Research and Development/Tech Change/Emerging Technologies; D31; D63; K0; K13.
Ano: 2005 URL: http://purl.umn.edu/10472
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Preferences for Inequality: East vs. West AgEcon
Suhrcke, Marc.
Do preferences for income inequality differ systematically between the post-socialist countries of Central and Eastern Europe and the Western established market economies? This paper analyses 1999 data from a large international survey to address this question. In particular, we examine whether attitudes to inequality differ between East and West even after the "conventional" determinants of attitudes are controlled for. Results suggest that this is indeed the case. A decade after the breakdown of communism, people in transition countries are indeed significantly more "egalitarian" than those living in the West, in the sense that they are less willing to tolerate existing income inequalities, even after the actual level of income inequality and other...
Tipo: Working or Discussion Paper Palavras-chave: Inequality; Transition countries; Attitudes; Political Economy; D30; D63; P5.
Ano: 2001 URL: http://purl.umn.edu/26369
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Towards a General Theory of Environmental Inequality: Social Characteristics of Townships and the Distribution of Pollution in China’s Jiangsu Province AgEcon
Schoolman, Ethan D.; Ma, Chunbo.
Tipo: Working or Discussion Paper Palavras-chave: Environmental Inequality; Hukou System; Pollution; China; Community/Rural/Urban Development; Health Economics and Policy; Resource /Energy Economics and Policy; D63; J15; J61; Q53; R12; R23.
Ano: 2011 URL: http://purl.umn.edu/117809
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