Negishi welfare weights in integrated assessment models: The mathematics of global inequality
Climatic Change 107:3, 417-432Author(s): Stanton, E.A.
Research Area(s): Climate EconomicsDescription: In the global climate policy debate, it is crucial to be transparent about the ethical assumptions used in climate economics models. Negishi weights, which are commonly used in integrated assessment models (IAMs), freeze the current distribution of income between world regions; without this constraint, IAMs that maximize global welfare would recommend an equalization of income across regions as part of their policy advice. This article describes the Negishi procedure and its origin in theoretical and applied welfare economics, and discusses the policy implications of its use and possible alternatives.