Uncertainty Can Go Both Ways
Henderson, David R.
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Bob Litterman (p. 38) makes some excellent points about the roles of uncertainty, size of damage, and economic growth in his discussion of how the government should “price” carbon emissions. However, he does not go far enough in considering the role of uncertainty. A deeper appreciation of uncertainty over the effect of carbon emissions on people’s lives leads to a wider range of reasonable policies than Litterman considers.
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