Climate Economics Seminar: What's Wrong with Infinity -- A Note on Weitzman's Dismal Theorem
Date(s): April 1, 2009 (10:30 am to 12:00 noon), Room 4144 EPA West, 1301 Constitution Ave., NW, Washington, DC
Location: Room 4144, EPA West
Contact: Ann Wolverton, Email: email@example.com; for entrance by non-EPA employees: Carl Pasurka, Email: firstname.lastname@example.org
Presenter: Andreas Lange (University of Maryland)
Description: Dr. Lange will discuss the meaning of Weitzman's (2008) dismal theorem, and demonstrate that his indicator of marginal expected rate of substitution is of limited relevance for cost-benefit analysis: cost-benefit analysis under uncertainty must jointly consider marginal willingness and the options/technologies of transferring income. Dr. Lange's approach shows that an infinite expected marginal willingness to substitute between today's and future's consumption does not generally jeopardize cost-benefit-analysis.