Negishi welfare weights in integrated assessment models: The mathematics of global inequality
In the global climate policy debate, it is crucial to be transparent about the ethical assumptions used in climate economics models. In this article, published online ahead of print, Liz Stanton describes Negishi weights, which are commonly used in integrated assessment models (IAMs) and freeze the current distribution of income between world regions. Without this constraint, IAMs that maximize global welfare would recommend an equalization of income across regions as part of their policy advice. Liz explains the origin of the Negishi procedure in theoretical and applied welfare economics, and discusses the policy implications of its use and possible alternatives.
This article is from the SEI Climate Economics Newsletter. For more information, or to download the article click here.