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Time discounting and long-run issues: the controversy raised by the Stern Review of the economics of climate change

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Abstract

The Stern Review on the economics of climate change has been a huge international event. It also raised an ardent controversy on the use of economic methodology. Did the Stern team cook the book to reach desired catastrophic outcomes? This paper is focused on the specific debate on time discounting when the far distant future is at stake. Examining arguments of protagonists, it concludes that the Stern Review's foundations were consistent with the utilitarian philosophy without falling into empirically erring conclusions, while critics of the Review had to reveal the dubious set of assumptions on which their own views were based. But the standard translation of utilitarianism into cost-benefit analysis can be questioned. Various avenues of progress are identified.

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