Discounting the Future
In “The Ethics of Climate Change,” John Broome argues on moral grounds against economists who claim that the need to take immediate action against climate change is not urgent. But Broome does not adequately scrutinize the common assumption of economists that future generations will be wealthier. In light of continued global-level ecological degradation and climate change pressures, surely we must face the possibility that those who come after us will be worse off.
Another unchecked assumption is that discounting (considering future benefits to be worth less than those received today) is a valid mechanism to apply across generations. Although discounting may be appropriate when costs and benefits can be internalized to one entity, it is a different story when costs are imposed on parties who have no say in the matter.
Brighton, South Australia
Broome errs in assuming the discount rate applies only to the value of goods. Discounting should include the value of services. A forest, for example, is an essential habitat and thus has a value beyond the present and future price of lumber. Shouldn’t we adopt an appreciation rate for the earth’s life-support systems?
Paul R. Epstein
Center for Health and the Global Environment
Harvard Medical School
BROOME REPLIES: I agree with Clifton that our projections for economic growth need scrutiny in light of climate change. But that is not a job for me as a philosopher; I can only report predictions that have been derived from existing economic models. I also agree that we need to think about the value of goods for future people in a different way from how we think about the value of our own future goods. The methods of ethics equip us to do that. Economists who ignore ethical considerations might justly be accused of ignoring Clifton’s criticism.
Epstein is right to point out that talk of a single discount rate is an oversimplification. Different commodities should be discounted at different rates. Scarce resources should be discounted at lower rates than produced goods—generally at or below zero.
Trust or Generosity?
Paul J. Zak’s use of the term “trust” to describe the state he investigates in “The Neurobiology of Trust” might be problematic. His studies rely heavily on an iteration of the trust game in which subject 1 decides how much of $10 to anonymously give an unknown subject 2. Subject 2 receives triple that plus $10 and decides how much to give back. What may actually be measured by this game is “generosity,” which imperfectly overlaps with trust. Moreover, trust and generosity can vary with circumstance and contingency. Many subject 1s might offer $5 in Zak’s game. But if the game involved $10,000, I doubt that many would offer half that sum.
Barry M. Maletzky
Oregon Health Sciences University
ZAK REPLIES: The beauty of using the trust game in our experiments is that it has been run many times in many variations and with relatively high stakes, including potential returns of $100 in the U.S. and an average three-month salary in eastern European countries. In each case, nearly all subject 1s chose to send money to a stranger. This transfer captures the essence of trust: it leaves one open to exploitation on the expectation of receiving a return. People seem to understand intuitively how to induce another person to reciprocate. This phenomenon is not generosity, because in the trust game a return is expected, whereas that is not the case when one is being generous. For further discussion of these distinctions, see my PLoS One paper on generosity, available at http://tinyurl.com/5hrlme