The Fourth Annual Arrow Lecture

Time and Persons in the Economics of Climate Change

April 13, 2011 · 6:00-8:00PM

Columbia University, Low Library Rotunda

  • Partha Dasgupta, Professor of Economics, University of Cambridge

Discussants

  • Kenneth Arrow, Professor Emeritus of Economics, Stanford University
  • Scott Barrett, Lenfest-Earth Institute Professor of Natural Resource Economics, The Earth Institute, Columbia University
  • Geoffrey Heal, Paul Garrett Professor of Public Policy and Business Responsibility, the Columbia Business School, Columbia University
  • Joseph E. Stiglitz, University Professor and Co-Chair, Committee on Global Thought, Columbia University

Sir Partha Dasgupta’s 2011 Arrow Lecture argues that the conventional moral formula used in discussing the economics of intergenerational justice in the context of global climate change is flawed, in that it does now have space for moral personhood. Dasgupta shows how Ramsey, Koopmans and Harsanyi use three distinct moral theories but arrived at the same moral formula for calculating intergenerational well-being. He then looks at recent interpretations of this formula by Cline, Stern and Nordhaus and the parameters of time preferences and consumption growth that led to their estimates of the discount rate. In Dasgupta’s view, the lack of agreement among these estimates stems from the different philosophical foundations that led to the selection of the parameters. Dasgupta then argues that time parameters change when we consider that people make a distinction between the self and others on personal matters, but on public matters, treat others impartially. This demands two discount rates, one private and one public. Dasgupta then concludes that the discount rate is a meaningless concept, and that the value unit of consumption across time, persons and generations are more significant. The valuation of marginal consumption changes on different people at different times and across contemporaries–and understanding the moral theories that are the basis of that valuation–is more important than discount rates.

View Sir Dasgupta’s  2011 Arrow Lecture Presentation

Sir Partha Dasgupta is the Frank Ramsey Professor of Economics and past chairman of the faculty of economics and politics at the University of Cambridge. From 1991 to 1997, Dasgupta was chairman of the scientific board of the Beijer International Institute of Ecological Economics of the Royal Swedish Academy of Sciences and, from 1989 to 1992, professor of economics and philosophy, and director of the Program in Ethics in Society at Stanford University. His research interests have covered welfare and development economics; the economics of technological change; population, environmental, and resource economics; the theory of games; and the economics of under nutrition. Dasgupta is a fellow of St. John's College, a fellow of the Econometric Society, a fellow of the British Academy, foreign honorary member of the American Academy of Arts and Sciences, honorary fellow of the London School of Economics, honorary member of the American Economic Association, member of the Pontifical Academy of Social Sciences, foreign associate of the U.S. National Academy of Sciences, and fellow of the Third World Academy of Sciences. He is a past president of the Royal Economic Society (1998-2001) and the European Economic Association (1999). Dasgupta was named Knight Bachelor by Her Majesty Queen Elizabeth II in 2002 in her Birthday Honours List for services to economics and was co-recipient (with Karl Goran Maler) of the 2002 Volvo Environment Prize. He is a fellow of the Royal Society (elected 2004) and a foreign member of the American Philosophical Society (elected 2005).

Scott Barrett is the Lenfest-Earth Institute Professor of Natural Resource Economics at SIPA and the Earth Institute. He was previously a professor at the Johns Hopkins University School of Advanced International Studies in Washington, DC, where he also directed the International Policy program. Before that, he was on the faculty of the London Business School. He has also been a visiting scholar at Yale. Barrett's research focuses on transnational and global challenges, ranging from climate change to infectious diseases. He is the author of Environment and Statecraft: The Strategy of Environmental Treaty-Making and most recently Why Cooperate? The Incentive to Supply Global Public Goods. He has advised a number of international organizations, including the United Nations, the World Bank, the OECD, the European Commission, and the International Task Force on Global Public Goods. He was previously a lead author of the Intergovernmental Panel on Climate Change and a member of the Academic Panel to the Department of Environment in the UK. Barrett is a research fellow with the Beijer Institute (Stockholm), CESifo (Munich), and the Kiel Institute of World Economics.

Geoffrey Heal is Paul Garrett Professor of Public Policy and Corporate responsibility and Professor of Finance and Economics at the Graduate School of Business at Columbia University, Professor in the School of Public and International Affairs, Co-Director of Columbia's Center for Economy Environment and Society and of the Earth Institute's Center for Globalization and Sustainable Development. He taught at Cambridge as a Fellow of Christ's College, and subsequently at Sussex and Essex Universities in the UK, at the Universities of Paris and Stockholm, and in the U.S. at Yale, Stanford and Princeton. Heal is a Director of the Union of Concerned Scientists and was a founder and chairs the board of the Coalition for Rainforest Nations, a group of forested tropical countries that has worked to reform the Kyoto Protocol to provide financial incentives for forest conservation. Heal's current research interests reach from financial markets, where he studies the role of derivatives and the securitization of catastrophic risks, to environmental conservation, where he studies the use of market-based incentives for conservation of forests and biodiversity.

Kenneth J. Arrow is Professor of Economics and of Operations Research, Emeritus at Stanford University. He earned his MA and PhD from Columbia University, where his dissertation explored his famous "impossibility theorem" and became the foundation for his seminal book, Social Choice and Individual Values. He was awarded the Nobel Memorial Prize in Economic Sciences with John Hicks in 1972 for their “pioneering contributions to general economic equilibrium theory and welfare theory.” Several of Arrow's students, including Joseph E. Stiglitz, have gone on to win the Nobel Prize. Arrow has also made major contributions to endogenous growth theory and information economics, and is considered one of the most influential practicing economists.

Joseph E. Stiglitz is University Professor, Co-chair of the Committee on Global Thought, and founder and Co-president of the Initiative for Policy Dialogue, at Columbia University. Stiglitz was a member of the Council of Economic Advisers (CEA) from 1993-95, during the Clinton administration, and served as CEA chairman from 1995-97. He then became Chief Economist and Senior Vice-President of the World Bank from 1997-2000. In 2001, he was awarded the Nobel Prize in economics for his analyses of markets with asymmetric information, and he was also a lead author of the 1995 Report of the Intergovernmental Panel on Climate Change, which shared the 2007 Nobel Peace Prize.

About the Annual Arrow Lecture

Columbia University’s annual Arrow Lecture honors economist Kenneth J. Arrow by featuring a scholar whose work addresses an aspect of his groundbreaking contributions to the field over the last 60 years. Arrow Lecturers model the “scholarly depth, wide-ranging interests, personal and intellectual generosity and openness, and consistent refusal to engage in ideological quibbling,” that Arrow is famous for.

The Arrow Lecturer is selected by a committee of Professors Patrick Bolton, Joseph E. Stiglitz, David Weinstein, Michael Woodford, and Myles Thompson of Columbia University Press. The Arrow Committee seeks to identify the boldest, most creative thinkers who will steer the discipline of economics into a future direction.

This series has been a collaboration between the Committee on Global Thought and the Program for Economic Research since 2008.

Read more about the Arrow Lecture and Publication Series