by Martin L. Weitzman
- This paper gives two plausible risk aversion axioms that a reduced form utility function of temperature change and the capacity to produce consumption might reasonably be required to satisfy. These axioms indicate that the standard practice multiplicative specification of disutility damages from global warming, as well as its additive analogue, are special cases of this paper's theoretically-derived utility function. Empirically, the paper gives some numerical examples demonstrating the surprisingly strong implications for economic policy of the distinction between additive and multiplicative disutility damages.
Weitzman, M.L. (2009). "What is the "Damages Function" for Global Warming and What Difference Might It Make?" Harvard University, mimeo, July 2009.
