A Dynamic Analysis of Human Welfare in a Warming Planet

70 Pages Posted: 14 Aug 2008

See all articles by Humberto Llavador

Humberto Llavador

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

John E. Roemer

Yale University - Department of Political Science; Yale University - Cowles Foundation

Joaquim Silvestre

University of California, Davis - Department of Economics

Date Written: April 2009

Abstract

Climate science indicates that climate stabilization requires low GHG emissions. Is this consistent with nondecreasing human welfare?

Our welfare index, called quality of life (QuoL), emphasizes education, knowledge, and the environment. We construct and calibrate a multigenerational model with intertemporal links provided by education, physical capital, knowledge and the environment.

We reject discounted utilitarianism and adopt, first, the Intergenerational Maximin criterion, and, second, Human Development Optimization, that maximizes the QuoL of the first generation subject to a given future rate of growth. We apply these criteria to our calibrated model via a novel algorithm inspired by the turnpike property.

The computed paths yield levels of QuoL higher than the year 2000 level for all generations. They require the doubling of the fraction of labor resources devoted to the creation of knowledge relative to the reference level, whereas the fractions of labor allocated to consumption and leisure are similar to the reference ones. On the other hand, higher growth rates require substantial increases in the fraction of labor devoted to education, together with moderate increases in the fractions of labor devoted to knowledge and the investment in physical capital.

Keywords: Quality of life, Climate change, Education, Maximin, Growth

JEL Classification: D63, O40, O41, Q50, Q54, Q56

Suggested Citation

Llavador, Humberto and Roemer, John E. and Silvestre, Joaquim, A Dynamic Analysis of Human Welfare in a Warming Planet (April 2009). Cowles Foundation Discussion Paper No. 1673. Available at SSRN: https://ssrn.com/abstract=1223182

Humberto Llavador

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34) 93 542 23 81 (Phone)
(34) 93 542 17 46 (Fax)

John E. Roemer (Contact Author)

Yale University - Department of Political Science ( email )

Box 208269
New Haven, DC 06520-8269
United States
203-432-5249 (Phone)
203-432-6196 (Fax)

HOME PAGE: http://pantheon.yale.edu/~jer39/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Joaquim Silvestre

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States

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