“Weitzman’s fat tail, with 10% chance of climate sensitivities out beyond 10C are circa 2007 (AR5); these extreme values have been pretty much debunked by the AR5 (not to mention Nic Lewis’ recent work…. Jerry Taylor’s argument for a carbon tax doesn’t really hold up.” (Judith Curry, below)
In her May 2015 piece, “What Would It Take to Convince You About Global Warming?,” Judith Curry tackles the “fat tails” argument for pricing carbon dioxide (CO2) emissions. She also considers Jerry Taylor’s argument for his conversion. (Taylor said: “… as each rebuttal was issued to Weitzman, they were just shredded. And then Litterman comes along and marries that analysis to the financial markets…. So my position fundamentally switched at that point.”))
Curry works from the IPCC consensus to question fat-tails as a basis for policy activism.…
[Editor Note: Robert Murphy’s 2009 views on the Andrew Weitzman “fat tails” argument for pricing carbon dioxide were presented yesterday. Today’s post shares Murphy’s review in 2016 of the same issue, part of his coauthored Policy Analysis (No. 801), “The Case Against a U.S. Carbon Tax,” with Patrick Michaels and Paul Knappenberger. ]
“Who would buy such an insurance policy?”
“Fat Tails” and Carbon Taxes as Insurance?
We note that the leaders in the pro-carbon tax camp are abandoning traditional cost-benefit analysis, claiming its use is inappropriate in the context of climate change. One reason given for this is concern over “fat tails”—concern that climate change could result in damages far greater than what is currently considered likely. Worries about fat tails lead some carbon tax proponents, like Harvard economist Martin Weitzman, to argue that, instead of treating a carbon tax as a policy response to a given (and known) negative externality, it should be considered a form of insurance pertaining to a catastrophe that might happen but with unknown likelihood.…
“Do you operate the ‘Institute of Energy Research’ out of your living room? What exactly entitles you to the evidently self-applied label of ‘energy expert’? … You appear to be a deputy adjunt miller, lacking both discernible qualifications in the real world and the ability to tell a good argument from a bad one.” (Holdren to Bradley, September 17, 2003)
Some 16 years ago, I put my book writing on hold to critically review the long written record of John P. Holdren, then (and now) a Professor of Environmental Policy at Harvard University. (He was President Obama’s science adviser between Harvard appointments, from 2009 until 2017.)
The result, “The Heated Energy Debate: Assessing John Holdren’s Attack on Bjorn Lomborg’s The Skeptical Environmentalist,” was published by the Competitive Enterprise Institute in mid-2003.…