Commentary: The Stern Review’s Economics of Climate Change

When economists analyse public policy, they take two sets of considerations into account. First, they identify the ways in which the world might work (the ways in which people would choose under various circumstances, the pathways Nature chooses, and so on). Once that task is done, they are able to chart the consequences (perhaps long-termconsequences) of alternative policies. Secondly, they value those consequences so as to be able to judge the relative desirabilities of the alternative policies. The former set of exercises involves description, while the latter involves evaluation. Disagreements over the desirability of alternative public policies arise when people don't agree on facts (e.g., the economic effects of a doubling of carbon concentration in the atmosphere) or when they don't agree on values (e.g., the way our well-being ought to be balanced against the well-being of all those future thems). Usually, of course, both facts and values are subject to dispute.