The answers to “How much should people sacrifice today for the benefit of those living several decades from now?” vary widely. This column suggests that people’s distaste for uncertainty – ambiguity aversion – favours immediate, rapid cuts in greenhouse gas emissions.
Most economists now agree on the need to control emissions of greenhouse gases, but there remains debate about how rapid the cuts should be. There has been an understandable, if simplistic, tendency to stylise the debate as “Stern versus Nordhaus”. In his eponymous Stern Review on the Economics of Climate Change (Stern 2007), sponsored by the UK government, Nicholas Stern advocated rapid cuts in emissions, starting immediately. He wasn’t the first economist to come to such a conclusion, but the prevailing view up to that point, epitomised – and indeed significantly informed – by William Nordhaus, was that policy should be more gradually ramped up (Nordhaus 2008).
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