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http://hdl.handle.net/10419/64205
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| Title: | | Positional goods, climate change and the social returns to investment  |
| Authors: | | Davis, Leila Skott, Peter |
| Issue Date: | | 2011 |
| Series/Report no.: | | Working Paper, University of Massachusetts, Department of Economics 2011-24 |
| Abstract: | | The economic analysis of global warming is dominated by models based on optimal growth theory. This approach can generate biases in the presence of positional goods and status effects. We show that by ignoring these direct consumption externalities, integrated assessment models overestimate the social return to conventional investment and underestimate the optimal amount of investment in mitigation. Empirical evidence on the influence of relative consumption on utility suggests that the bias could be quantitatively significant. Our results from a simple survey support this conclusion. |
| Subjects: | | representative agent consumption externalities positional goods relative consumption welfare global warming discount rates |
| JEL: | | Q13 I3 E1 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Working Papers, Department of Economics, University of Massachusetts
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