On Modeling and Interpreting the Economics of Catastrophic Climate Change

  title={On Modeling and Interpreting the Economics of Catastrophic Climate Change},
  author={Martin Weitzman},
  journal={The Review of Economics and Statistics},
  • M. Weitzman
  • Published 28 January 2009
  • Economics
  • The Review of Economics and Statistics
With climate change as prototype example, this paper analyzes the implications of structural uncertainty for the economics of low-probability, high-impact catastrophes. Even when updated by Bayesian learning, uncertain structural parameters induce a critical tail fattening of posterior-predictive distributions. Such fattened tails have strong implications for situations, like climate change, where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow… 

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