 INTERNATIONAL INEQUITY AVERSION AND THE SOCIAL COST OF CARBONClimate Change Economics (CCE), 2010, vol. 01, issue 01, 21-32 Abstract: I define the rate of inequity aversion, distinguishing between the pure rate and the consumption rate. I measure the rate of aversion to inequality in consumption as expressed in the development aid given by rich countries to poor ones between 1965 and 2005. There is an ambiguous relationship between the pure rate of inequity aversion and the consumption rate, driven by the rate of risk aversion. However, for a reasonable choice of the rate of risk aversion, rich countries are shown to be inequity averse, and increasingly so over time. The social cost of carbon is very sensitive to equity weighting and assumptions about the rate of risk and inequity aversion. Estimates of the consumption rate of inequity aversion for recent data suggest that the equity-weighted social cost of carbon is less than 50% larger than the unweighted estimate. Keywords: Inequity aversion; risk aversion; income distribution; development aid; climate change; social cost of carbon (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wsi:ccexxx:v:01:y:2010:i:01:n:s2010007810000029 Ordering information: This journal article can be ordered from DOI: 10.1142/S2010007810000029 Access Statistics for this article Climate Change Economics (CCE) is currently edited by Robert Mendelsohn More articles in Climate Change Economics (CCE) from World Scientific Publishing Co. Pte. Ltd. |
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