Edited by Frank Whelon Wayman, Paul R. Williamson, Bruce Bueno de Mesquita and Solomon Polachek
Editor’s introduction to Part III
We now come to Part III of the book on “The Value of the Future.” In Chapter 5, Farmer and Geanakoplos discuss this in terms of discounting for the future, offering a critique of, and alternative to, how this is conventionally handled in economics. They see a number of advantages to their method and derivations, and believe also that their method is a representation close to how discounting is actually done in financial markets. While cast as a general model, the Farmer and Geanakoplos approach has manifest applicability to the debate over what and how much to expend to reduce the degree of global warming. As Sprinz points out in his chapter (Chapter 6, “Long-Term Policy Problems: Definition, Origins, and Responses”), environmental problems such as global warming are among the class of problems, such as old age insurance, infrastructure investment, and so on, in which it is especially important to think about the future. Sprinz looks at the relationship of government to many long-term, intergenerational problems, including social security for the elderly, budget deficits, and especially environmental problems.
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