The Sixth Annual Arrow Lecture

Pricing the Planet’s Future: The Economics of Discounting in an Uncertain World

April 25, 2013 · 6:00-8:00PM

Columbia University, School of International and Public Affairs, Room 1501

  • Christian Gollier, Professor of Economics and Director, Toulouse School of Economics, University of Toulouse


  • Bernard Salanié, Professor of Economics, Columbia University
  • Kenneth Arrow, Joan Kenney Professor of Economics and Professor of Operations Research, Emeritus, Stanford University
  • Joseph E. Stiglitz, University Professor and Co-chair of the Committee on Global Thought, Columbia University

The Sixth Annual Arrow Lecture was inspired by Arrow’s important work on intergenerational equity and climate change, particularly “Intertemporal Equity, Discounting and Economic Efficiency” (with Cline, Maler, Munasinghe, Squitieri and Stiglitz) in Climate Change 1995 and “Discounting, Morality and Gaming,” in Discounting and Intergenerational Equity (Eds. Portney and Weyant, 1999). Arrow Lecturer Gollier discussed the theory of risk-bearing, with an application to the welfare analysis of policies to reduce the risk of climate change. He compared various approaches to carbon discounting, including the established carbon pricing models developed by Nordhaus and Stern, the discount rates set by various states, as well as positivist, normative and underlying utilitarian frameworks for discounting. He concludes with an argument for a short- and long-term discount rate, suggesting figures for both, and proposes a carbon cost of $20 per ton of CO2.

Read more about the Kenneth J. Arrow Lecture and Publication Series.

Christian Gollier is Director of the Toulouse School of Economics, Research Director at the Institut d’Economie Industrielle and researcher at the Laboratoire d’Economie des Ressources Naturelles, a research center associated with INRA and CNRS on environmental economics. He has published more than 100 articles in top-tier economic journals, as well as seven books on risk including The Economics of Risk and Time (MIT Press), winner of the 2001 Paul A. Samuelson Award and of the 2002 Prix Risques-les Echos, and Pricing the Planet’s Future (Princeton University, 2012). He was one of the Lead Authors of the fourth and fifth Reports of the Intergovernmental Panel of Climate Change (IPCC, 2007 and 2013), which was awarded the Nobel Peace Prize in 2007.

Bernard Salanié is Professor of Economics at Columbia University. Formerly Director of CREST (Paris), he has taught at Ecole Polytechnique, Stanford University, the University of Chicago, and the Toulouse School of Economics. Salanié is the author of Microeconomics of Market Failures (2000) and The Economics of Contracts: A Primer (second edition, 2005), both published by the MIT Press.

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