MARC Record from Library of Congress

LEADER: 02109cam a22002777a 4500
001 2007616621
003 DLC
005 20071102084707.0
007 cr |||||||||||
008 071101s2007 mau sb 000 0 eng
010 $a 2007616621
040 $aDLC$cDLC
050 00 $aHB1
100 1 $aWeitzman, Martin L.,$d1942-
245 10 $aStructural uncertainty and the value of statistical life in the economics of catastrophic climate change$h[electronic resource] /$cMartin Weitzman.
260 $aCambridge, MA :$bNational Bureau of Economic Research,$cc2007.
490 1 $aNBER working paper series ;$vworking paper 13490
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on 11/1/2007.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"Using climate change as a prototype motivating example, this paper analyzes the implications of structural uncertainty for the economics of low-probability high-impact catastrophes. The paper shows that having an uncertain multiplicative parameter, which scales or amplifies exogenous shocks and is updated by Bayesian learning, induces a critical "tail fattening" of posterior-predictive distributions. These fattened tails can have strong implications for situations (like climate change) where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages. The essence of the problem is the difficulty of learning extreme-impact tail behavior from finite data alone. At least potentially, the influence on cost-benefit analysis of fat-tailed uncertainty about the scale of damages -- coupled with a high value of statistical life -- can outweigh the influence of discounting or anything else"--National Bureau of Economic Research web site.
710 2 $aNational Bureau of Economic Research.
830 0 $aWorking paper series (National Bureau of Economic Research : Online) ;$vworking paper no. 13490.
856 40 $uhttp://papers.nber.org/papers/w13490