Stern replies to Leonhardt

Remember last week, when the world was carefree, and all we had to worry about were minor things like the fate of the planet? David Leonhardt’s Economix column bravely entered the world of discounting — and managed to get it wrong. John Quiggin, who really understands this stuff, tried to explain it on his blog, but now we have Nick Stern himself explaining it on the NYT letters pages, with astonishing lucidity.

My analysis places much lower weight on a future dollar than a dollar now, for the ethical reasons that future generations may have higher consumption and that there is a (small) possibility of extinction, for example from a meteorite.

Professor Nordhaus advocates further discounting for the dubious reason that those born later have less significance. But reasonable people can differ on ethical issues.

Now there’s a really good explanation to use in future when someone like Leonhardt starts getting confused between delta and eta.

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