Once again, I feel the urge to try to get rid of the jargon and the Greek letters and explain what's going on. If person A has $1 million in wealth and person B has $10,000 in total wealth, and you can increase "total" wealth by doing something that takes $10 from B (the poor chap) and giving $11 to A (the rich guy), should you do so?
The position of someone on the Left would ordinarily be, "No." But when it comes to the issue of how much environmental damage we should leave it for our wealthy descendants to clean up, the Stern report is saying "Yes, increase total wealth." See my earlier post. And many on the Left are cheering them on.
My worst fear is that instead of using restructuring the economy as a means to fight global warming, the left aims to use the global warming issue as a means to restructure the economy. The rush to defend the Stern report's discounting approach, at what seems to me a huge cost of overall intellectual inconsistency, serves to reinforce this fear.
'Jane Galt' does seek to distance herself from me on the issue of global warming skepticism.
UPDATE: John Quiggin says that I am mis-reading eta, a point made by the first commenter below. I think they're right, and I'm wrong. This section says,
[eta] measures how fast the value of an increment in consumption falls as consumption rises, for example when it is equal to one, an extra unit to Person A, with three times the consumption of Person B, would have one third the value to that if the extra unit went to Person B. If the elasticity were equal to two, the extra unit would have one ninth of the value.
So, using the Stern report methodology, the rich guy has to gain $1001 from the transfer of $10 from the poor dude in order for this to be a "socially desirable" change. I said it was $11. My bad.
I got into this defending Arnold Kling from scurrilous charges of hackery. I was not, as my opponents mistakenly assumed, defending him because we agree on Global Warming. we do not. I think global warming is happening...
"Global warming is happening" is too broad a statement. There are a number of propositions that one might buy into.
1. Average global temperatures in the past decade are higher than for any other ten-year period since 1900.
2. Climate models explain this rise.
3. The cause of the rise is CO2.
4. Temperatures will rise further in the coming decades.
5. Given the consequences predicted, we need to reduce CO2 emissions, even at a very high cost of lower economic growth.
This is not an exhaustive list, but it is sufficient to spell out where I am a skeptic and where I am not.
I am not a skeptic about the temperature data. I am a skeptic about climate models, because of the nature of the statistical problem (too many potential model specifications, too little data, too much trouble coming up with an appropriate way to time-aggregate the data), and because of the frequent use of the word "calibrated" as in "the models have been calibrated to fit historical climate data." (The Stern report used the c-word.) I am allergic to the word "calibrated." Whenever I see a paper in the American Economic Review that uses a "calibrated" model, my instinct is to skip it.
It troubles me that in order to connect CO2 to global warming, you pretty much need the models. If you just fit a simple bivariate model using CO2 and global average temperature, you would not be particularly confident that you had found a stable, well-fitting relationship. The climate modelers reassure themselves that when they add more subtle features they are getting better fits. That does not do as much for me as it does for them.
I think that if CO2 is a main causal variable, then we will see temperature increases going forward. Even if something else is the cause, that something else may be tending upward. So, suppose we had to bet on whether average global temps in 2010-2019 will be higher or lower than 2001-2009. I think if you gave me even odds, I'd bet on an increase. Maybe if you gave me 3 to 1 (I win $3 if I bet against a temperature rise and I win, I lose $1 if I lose), I'd bet against an increase. Hard to say.
Where I really get off the train, however, is at point 5--drastically reducing emissions at a high cost of economic growth. My slogan would be "Backwardness kills." I think that people in Bangladesh (or New Orleans, for that matter) are at least as threatened by economic and political backwardness as they are by coastal flooding.