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Notes
More precisely, £1.145 million at 2000 prices. The figure apparently includes gross lost output, medical and ambulance costs (HM Treasury Citation2003), Annex 2, p. 63.
Using 1995 prices.
Dr. Terry Barker, in oral evidence to the House of Lords Economic Affairs Committee on The Economics of Climate Change, 22 February 2005.
The issue is discussed in IPCC 2001. See Metz et al., Citation2001: 483. The $1 million value of life is in 1999 prices.
A good example of how ad hoc is given by Wolff Citation2006: 422. The UK Health and Safety Executive gives all lives a uniform value in its CBA work, except deaths from cancer, which are valued at exactly twice the usual figure.
I am grateful to a referee for reminding me of this point. See Brekke Citation1997.
Neither Posner nor Sunstein seem to realise that this example reveals a general flaw with valuing life in terms of risk, not just one applying to small probabilities of catastrophe.
Stern rejects the argument for pure time preference based on impatience, but argues that there is a non-trivial probability that the human race may not recognisably survive into the distant future, because of catastrophes like a meteorite impact or devastating nuclear war. This leads Stern to assume a small degree of effective pure time preference: pure time preference equivalent to the human race facing an almost 1 in 10 chance of extinction within 100 years, which seems implausibly large if this is really the only justification. See Stern Citation2007: 35–6, 53.
For instance, guidance for the conduct of CBAs in previous editions of the UK Treasury Green Book recommended time horizons of around 30 years.
This version of the argument that future generations are disenfranchised draws heavily on Broome Citation1999, ch. 4.
The UK Office of the Deputy Prime Minister commissioned a report on recent research on discounting, which explicitly recommended declining discount rates as a response to the philosophical objections (Office of the Deputy Prime Minister Citation2002: 13). The Stern Review shares this conclusion, although for different reasons (Stern Citation2007: 35–7, 56–7).
The discount factor in period t, δ t , is related to the discount rate r using the standard net present value formula δ t =1/(1+r) t . A pioneering theoretical contribution on declining discount rates is Weitzman Citation(1998). For a simple example illustrating the mathematical relationships which give rise to declining discount rates, see Pearce et al. Citation(2003): 128–9.
Cass Sunstein is one prominent critic who now supports a limited precautionary principle (Sunstein Citation2005: chapter 5).
For seminal contributions in economics and philosophy see Sen Citation1973; Davidson Citation1963.
Some readers may baulk at the phrase ‘incommensurably worse’. There are two possible interpretations. First, it is a shorthand for ‘the alternatives are not directly comparable, but on other ethical grounds one alternative is worse’. Second, the alternatives are comparable (one is worse), but not commensurable – there is no cardinal measure for ranking them. For an influential statement of the comparability/commensurability distinction, see Chang Citation1997.
The standard arguments used by economists to reject incommensurability problems in CBA are analysed in Aldred Citation2006.
