This project is about the ways in which the public deals with neuralgic societal risks such as climate change, demographic change and state deficits in the 21st century (“big risks"). It aims to answer overarching questions from the three disciplinary perspectives of practical philosophy, political science and financial mathematics. Practical philosophy considers the epistemic difficulties of “knowing" risks and offers normative risk assessments and reactions to them. Political science studies the intersection between the political and the societal spheres and is equipped to deal with the effects of social and political positions on individual perceptions. Financial mathematics offers tools for the risk management of quantifiable risks and allows designing instruments for diversification and hedging of risks. The project is funded by the Funk Stiftung.
The fourth Risk Lecture will be given by Simon Dietz (LSE):
Simon Dietz -
Climate change as a big risk and how economics has come to understand it.
Climate change is one of the biggest and most intractable societal risks of modern times, variously described as the “greatest market failure the world has seen”, “the perfect moral storm”, and a “super-wicked problem”. This lecture chronicles how the economics profession has framed and assessed climate change over the last thirty years. A dominant idea has always been that reducing carbon emissions is a form of long-term investment, costing the present generation while providing benefits for future generations. This is true to a large degree, but within the last ten years or so the narrative has evolved and carbon emissions reductions have been recast as an exercise in managing catastrophic risk, thus being akin to purchasing planetary insurance. This has put the spotlight on limitations in our understanding of climate risk management, such as the nature of economic damages from rising global temperatures, and the fact that climate change is less a problem of risk and more a problem of Knightian/structural uncertainty. I will review the latest evidence on, and approaches to, these issues. Perhaps surprisingly, I will conclude that, in the face of limited evidence in key areas and fundamental theoretical disputes, the nature of economists’ policy advice on climate change should actually be quite simple.
The Risk Lecture is in room S06 S00 B41 (campus essen) and starts at 5 pm.