Erik Kempe Award 2011: Christian Gollier and Martin L. Weitzman

The 2011 Erik Kempe Award has been awarded to Christian Gollier and Martin L. Weitzman for their study
“How Should the Distant Future be Discounted when Discount Rates are Uncertain”
published in Economics Letters 107, 250-253, 2010.

The Nomination Committee, composed by Thomas Aronsson (chair), Erwin Bulte and Karine Nyborg, has awarded this paper for the following motivation:
In the study of cost benefit analysis, discounting allows effects occurring at different points in time to be compared, and the choice of an appropriate discount rate is one of the most critical issues in economics. This is particularly the case for projects and policies with a very long time-horizon, such as those associated with climate change, where today’s actions may affect the welfare of human beings in the distant future. Seemingly insignificant changes in discount rates may have very large effects on the present value of future benefits and/or costs and, therefore, also on the weight that today’s decision-makers attach to the welfare of future generations.