“according to some top environmental economists, we have good reason to believe the true cost of emitting carbon is actually a lot higher than that price tag suggests.
There are a couple of reasons for that. First, until now, the economists who calculated the SCC had barely factored in one of the biggest harms that climate change can cause: human mortality. Second, the way the SCC had been calculated rested on a problematic premise: that damage in the future counts for significantly less than damage in the present.”
“People do tend to value the present more than the future. You may grab that chocolate chip cookie today, for instance, even though you know it means you’ll have to lean into the diet extra hard tomorrow. But that doesn’t necessarily mean our climate models should follow suit. In fact, some philosophers think baking in people’s rate of pure time preference is a terrible idea.
“We’re basically just measuring a form of human impatience and irrationality, then trying to add it into political decision-making,” Toby Ord, a senior research fellow at the Future of Humanity Institute at Oxford University, argued on the 80,000 Hours podcast in 2017. “It doesn’t seem to be the kind of thing that one should be respecting at all. It’s just like finding a cognitive bias that we have, and then adding it back into your economic analysis in order to make your analysis biased in the same way.””
“Now, that’s not to say the pure rate of time preference should be absolutely zero. As Carleton and Greenstone wrote, “Perhaps the most compelling explanation for a nonzero pure rate of time preference is the possibility of a disaster (e.g., asteroids or nuclear war) that wipes out the population at some point in the future, thus removing the value of any events that happen afterwards.” Ord has made the same argument, suggesting we should discount the future by the extinction risk to humanity, and no more.
Whatever you think about discounting, intellectual honesty requires us to admit that how we choose to answer the question of what we owe to future generations gets baked into the discount rate and thus into the SCC. And any answer to that question will be a subjective moral judgment, not some objective mathematical truth.”
“even the first purely economic reason to discount the future (society will be wealthier in the future, and damages matter less the wealthier you are) is not some objective truth.”