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The Aggregation Dilemma

Author

Listed:
  • Ingmar Schumacher
Abstract
The results in this paper show that the level of aggregation used in a social welfare func- tion matters significantly for policy analysis. Using climate change as an example, it is shown that, under the mild and widely-accepted assumptions of asymmetr

Suggested Citation

  • Ingmar Schumacher, 2014. "The Aggregation Dilemma," Working Papers 2014-224, Department of Research, Ipag Business School.
    • Handle: RePEc:ipg:wpaper:2014-224
    as

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    File URL: https://faculty-research.ipag.edu/wp-content/uploads/recherche/WP/IPAG_WP_2014_224.pdf
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    References listed on IDEAS

    as
    1. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, October.
    2. Carlo Carraro & Johan Eyckmans & Michael Finus, 2006. "Optimal transfers and participation decisions in international environmental agreements," The Review of International Organizations, Springer, vol. 1(4), pages 379-396, December.
    3. Schumacher, Ingmar, 2015. "The endogenous formation of an environmental culture," European Economic Review, Elsevier, vol. 76(C), pages 200-221.
    4. Stephen C. Peck & Thomas J. Teisberg, 1999. "CO2 Emissions Control Agreements: Incentives for Regional Participation," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 367-390.
    5. Thierry Bréchet & François Gerard & Henry Tulkens, 2011. "Efficiency vs. Stability in Climate Coalitions: A Conceptual and Computational Appraisal," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 49-76.
    6. Samuel Fankhauser & Richard Tol & DAVID Pearce, 1997. "The Aggregation of Climate Change Damages: a Welfare Theoretic Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(3), pages 249-266, October.
    7. Nordhaus, William D, 1993. "Optimal Greenhouse-Gas Reductions and Tax Policy in the "Dice" Model," American Economic Review, American Economic Association, vol. 83(2), pages 313-317, May.
    8. Marchiori, Luca & Maystadt, Jean-François & Schumacher, Ingmar, 2012. "The impact of weather anomalies on migration in sub-Saharan Africa," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 355-374.
    9. Reyer Gerlagh, 2006. "ITC in a Global Growth-Climate Model with CCS: The Value of Induced Technical Change for Climate Stabilization," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 223-240.
    10. Anthoff, David & Tol, Richard S.J., 2010. "On international equity weights and national decision making on climate change," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 14-20, July.
    11. Edenhofer, Ottmar & Bauer, Nico & Kriegler, Elmar, 2005. "The impact of technological change on climate protection and welfare: Insights from the model MIND," Ecological Economics, Elsevier, vol. 54(2-3), pages 277-292, August.
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    13. Marc Fleurbaey & Bertil Tungodden, 2010. "The tyranny of non-aggregation versus the tyranny of aggregation in social choices: a real dilemma," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(3), pages 399-414, September.
    14. Valentina Bosetti, Carlo Carraro and Marzio Galeotti, 2006. "The Dynamics of Carbon and Energy Intensity in a Model of Endogenous Technical Change," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 191-206.
    15. Elizabeth Stanton, 2011. "Negishi welfare weights in integrated assessment models: the mathematics of global inequality," Climatic Change, Springer, vol. 107(3), pages 417-432, August.
    16. Kurosawa, Atsushi, 2004. "Carbon concentration target and technological choice," Energy Economics, Elsevier, vol. 26(4), pages 675-684, July.
    17. Valentina Bosetti, Carlo Carraro, Marzio Galeotti, Emanuele Massetti, Massimo Tavoni, 2006. "A World induced Technical Change Hybrid Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 13-38.
    18. Martin L. Weitzman, 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 1-19, February.
    19. d'Arge, Ralph C & Schulze, William D & Brookshire, David S, 1982. "Carbon Dioxide and Intergenerational Choice," American Economic Review, American Economic Association, vol. 72(2), pages 251-256, May.
    20. Popp, David, 2006. "ENTICE-BR: The effects of backstop technology R&D on climate policy models," Energy Economics, Elsevier, vol. 28(2), pages 188-222, March.
    21. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
    22. Anthoff, David & Hepburn, Cameron & Tol, Richard S.J., 2009. "Equity weighting and the marginal damage costs of climate change," Ecological Economics, Elsevier, vol. 68(3), pages 836-849, January.
    23. repec:ipg:wpaper:13 is not listed on IDEAS
    24. Martin L. Weitzman, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 703-724, September.
    25. Mendelsohn, Robert & Dinar, Ariel & Williams, Larry, 2006. "The distributional impact of climate change on rich and poor countries," Environment and Development Economics, Cambridge University Press, vol. 11(2), pages 159-178, April.
    26. Toshihiko Masui, Tatsuya Hanaoka, Saeko Hikita, and Mikiko Kainuma, 2006. "Assessment of CO2 Reductions and Economic Impacts Considering Energy-Saving Investments," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 175-190.
    27. -, 2009. "The economics of climate change," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    Full references (including those not matched with items on IDEAS)

    Citations

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    as


    Cited by:

    1. Ingmar Schumacher, 2018. "The Aggregation Dilemma In Climate Change Policy Evaluation," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 9(03), pages 1-20, August.
    2. repec:ipg:wpaper:2014-467 is not listed on IDEAS
    3. repec:ipg:wpaper:2014-491 is not listed on IDEAS
    4. repec:ipg:wpaper:2014-483 is not listed on IDEAS
    5. repec:ipg:wpaper:2014-496 is not listed on IDEAS
    6. repec:ipg:wpaper:2014-454 is not listed on IDEAS
    7. repec:ipg:wpaper:2014-460 is not listed on IDEAS
    8. repec:ipg:wpaper:2014-484 is not listed on IDEAS
    9. Ingmar Schumacher, 2019. "Climate Policy Must Favour Mitigation Over Adaptation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(4), pages 1519-1531, December.
    10. repec:ipg:wpaper:2014-479 is not listed on IDEAS
    11. repec:ipg:wpaper:2014-482 is not listed on IDEAS

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    More about this item

    Keywords

    Aggregation Dilemma; social welfare function; Integrated Assessment Models; climate policy.;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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