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Seminar: What's Wrong with Infinity -- A Note on Weitzman's Dismal Theorem

Date(s): April 1, 2009, 10:30am-12:00pm

Location: Room 4144 EPA West, 1301 Constitution Ave., NW, Washington, DC

Contact: Ann Wolverton, 202-566-2278; for entrance by non-EPA employees: Carl Pasurka, 202-566-2275

Presenter(s): Andreas Lange (University of Maryland)

Description: Dr. Lange will discuss the meaning of Weitzman's (2008) dismal theorem, and demonstrate that his indicator of marginal expected rate of substitution is of limited relevance for cost-benefit analysis: cost-benefit analysis under uncertainty must jointly consider marginal willingness and the options/technologies of transferring income. Dr. Lange's approach shows that an infinite expected marginal willingness to substitute between today's and future's consumption does not generally jeopardize cost-benefit-analysis.

Seminar Category: Climate Economics