Here is a long post, criticizing Marty Weitzman’s view that we should regard a small chance of a catastrophic event as reason to buy "insurance protection" against that event.
I am not persuaded by Jim Manzi’s major point of rebuttal, namely: "the heart of Weitzman’Â€Â™s paper revolves around the first point: the
probability of extreme disaster is larger than current models assume." My reading of Weitzman (which may not exactly be Weitzman’s own view) is the following: raising the discount rate doesn’t choke off our worries of future dangers. In many plausible models, a higher discount rate means a higher degree of risk aversion as well, and thus we are back to worrying.
(For one simple version of this intuition, imagine a person near starvation. That person has both a high discount rate — he wants to eat more now — and he is very risk averse, for fear of losing his remaining food and dying. A billionaire in contrast can be more patient and bear risk more readily. The discount rate and the degree of risk aversion thus often move together, admittedly there are great complications here.)
Manzi also argues that: "There is No Good Reason to Think That the Probability Distribution for Estimates of Climate Sensitivity Fits Any Functional Form." Fair enough, there is only one world and ultimately the meaning of probability is murky, Bayesian or not. But we still have to act on probability estimates in an "as if" way and indeed we all do in a personal context.
If you want to know where Manzi is coming from, here is his critique of the Pigou tax on carbon.
The most serious critique of Weitzman, in my view, is simply that governments are bad at getting people to bear large costs to insure against low probability events, especially when the costs accumulate each year and there is little positive feedback in the interim. ("Reelect me, our costly tax held back global warming for yet another four years! Things didn’t get worse!" does not thrill.) Our government does persuade its voters to support a large defense budget, but this is done in part by a) periodic conflict and invasions, and b) people holding deeply irrational views of America’s proper place in the world (e.g., "my country, right or wrong"). On other foreign policy issues these irrational attitudes sometimes become very costly. So we might get people to support a Weitzmanesque insurance policy, but to do so they probably would have to be overworried about the relevant problems, and those overworries would lead to other policy mistakes. As a general rule of thumb, when it comes to risk the alternative is public overworry or public underworry, don’t ever expect to hit that sweet spot in between or even get close.
Thanks to Reihan for the pointer.