Formalism Still Running Amok

Tyler Cowen has a post up, vis-a-vis the global warming debate, linking to a paper that argues for negative discount rates for environmental goods.

Early in the paper the author argues that since greenhouse gases create a massive externality, then some action on climate change must be Pareto efficient (ie., economist-speak for a good idea). Of course, in addition to a lot of other considerations, there are already large taxes on, for example, gasoline (about 50 cents per gallon in the typical US state and several dollars per gallon in Europe), so this is not so obvious to me.

More broadly, I’ve never seen a counter-argument to my early post that it doesn’t make sense to argue over discount rates when we should really just look at the raw projections for effects and odds by year out into the future and compare alternatives directly without trying to use a function to convert this comparison of vectors into a comparison of scalars for us.