Ethics of the environment

Question 1

What is naturalist moral philosophies?

Answer 1

Naturalist ethical systems treat non-human entities as morally considerable.

ChatGPT:
Naturalist ethical systems take a broader view of moral consideration than some traditional ethical frameworks, which often focus primarily on humans and their interests. In these naturalist systems, the circle of moral concern is expanded to include not just humans but also non-human entities. This could mean animals, plants, entire ecosystems, or even geological formations and bodies of water. The core idea is that these non-human entities have intrinsic value or rights that deserve respect and consideration in our moral decision-making processes.

Question 2

Is deep ecology a naturalist ethics?

Answer 2

Yes it is. That argue a thing is right, when it tends to preserve the integrity, stability and beauty of the biotic community.

Question 3

What are the two broad classes of ethical systems? Relate them to the naturalist moral philosophies?

Answer 3

Consequentialist systems judge actions by the consequences that follow from them.
- Naturalist position: By extending beyond humans the entities for whom consequences count (Singer 1993)

Deontological systems judge actions by whether they fulfil
obligations.
- Naturalist position: By extending beyond humans the entities to whom obligations are owed
(Watson 1979)

Question 4

What does Libertarianism thinks about the individual human and the role of the government?

Answer 4

Libertarianism is a humanist ethical system.
* Its basic axiom is that individual human rights are
inviolable. Rights attach only to individual humans. No
infringement of such rights can be justified by the
consequences arising.

Libertarianism implies a very limited role for government.
* For many libertarians government action would basically be
limited to maintaining the institutions required to support free
contracting and exchange.

Question 5

What is utilitarianism?

Answer 5

Utilitarianism is a “consequentialist” moral philosophy.
* It is the consequences of an action that determine its
moral worth. The ends may justify the means, as with a lie
that saves a life.

Question 6

How do the utilitarianism define the set of entities for whom the consequences are to be considered?

Answer 6

Usually the set is restricted to humans.
* But Singer (1993), for example, argues that it should include
all sentient beings capable of pleasure and pain.

Question 7

The utilitarianism that underpins welfare economics is
anthropocentric. How are there view on the welfare economics different then naturalists?

Answer 7

The foundational principle of utilitarianism in welfare economics is human-centered, meaning it primarily values the interests and welfare of humans. In this framework, non-human entities like animals, plants, or ecosystems are considered important only to the extent that they impact human well-being and happiness. Essentially, the moral universe of this approach is limited to humans, and the fate of non-human entities matters morally only when it has a direct or indirect effect on human experiences and interests.

For instance, the preservation of a forest might be valued not for the forest’s intrinsic worth or the lives of the creatures inhabiting it, but because of the benefits it provides to humans, such as recreation, air purification, or its role in mitigating climate change. In this view, the natural world and its non-human inhabitants are seen through a lens that focuses on their utility to humans, rather than acknowledging their value independently of human interests.

The naturalists would argue that the lives of the creatures and plants also should be taken into account.

Question 8

What is preference satisfaction utilitarianism

Answer 8

In the field of economics, the measure of what is beneficial or detrimental to an individual—what enhances or diminishes their utility—is judged by the individual’s own set of preferences. This concept is known as preference satisfaction utilitarianism, where the yardstick for good or bad outcomes is aligned with what a person desires or prefers. Following this principle, the concept of consumer sovereignty emerges, asserting that economic results ought to mirror the preferences of consumers. Essentially, it champions the idea that the choices and desires of individuals should guide economic activities and outcomes, ensuring that what is produced and how it is distributed aligns with what people actually want or value.

Social welfare is then some aggregation of individuals´ utilities.

Question 9

How is an ordinal and cardinal utility function different, and why is it important?

Answer 9

Utility function

U = U(X_1, X_2,….X_i,…X_N)

To combine individual measures into a total or aggregate measure, such as when calculating the overall utility (U) from various people, those measures need to be cardinal numbers. Cardinal numbers are quantities like weight, height, or distance, which can be added, subtracted, and compared in magnitude. This requirement exists because the usual mathematical operations—addition, subtraction, multiplication, division—only make sense with cardinal numbers, which have a consistent scale and measurable differences between them.

In contrast, ordinal numbers merely provide a ranking or order without indicating the magnitude of difference between ranks. For example, ordinal numbers are used for street addresses, where “10th Street” doesn’t imply it’s ten times anything of “1st Street,” just that it follows in sequence. Since ordinal numbers don’t convey the size of the gap between ranks, you can’t meaningfully add, subtract, or perform other standard arithmetic operations on them in the way required for aggregating individual utilities into a collective measure.

It makes interpersonal comparison possible.

Question 10

How does cardinality make interpersonal comparison possible? What are the gains of it?

Answer 10

In the context of interpersonal comparisons, cardinality means that we can compare the utility or satisfaction levels of different individuals on a measurable scale. For example, if one person gains 10 units of utility from a certain action and another gains 5 units, we can say that the first person derived twice as much utility from the action compared to the second. This comparison is possible because utility is treated as a cardinal number, allowing for a direct, quantifiable comparison of well-being or satisfaction across individuals.

This concept is crucial in economics and welfare analysis, as it underpins the ability to assess and compare the impacts of policies or actions on the welfare of different individuals or groups within society. It enables policymakers to consider not just whether policies will improve welfare on average or in total, but how those improvements are distributed among the population, facilitating more nuanced and equitable decision-making.

The standard propositions of demand theory can be derived from
ordinal utility functions, and many economists are reluctant to:
* Assume cardinality; and
* Admit interpersonal comparisons.

If cardinality is assumed, aggregation can use a social
welfare function.

Question 11

What happens if cardianality is not assumed and the policy advise is restricted to the application of compensation tests?

Answer 11

We will ignore distributional issues. Much of applied welfare economics does ignore distribution (fairness, equity and justice) and focuses on
efficiency via compensation tests.

Question 12

What does the necessary condition in a utilitarian social welfare function tell us?

Answer 12

Policy problem:

Maximize W = W(U^A, U^B)

subject to U^A = U^A(X^A) and U^B = U^B(X^B) and X = X^A + X^B

The necessary condition for a utilitarian social optimum is
W_A(U^A)_X = W_B(U^B)_B

where W_A and W_B are the derivatives of the social welfare
function w.r.t. (U^A)_X and (U^B)_B and UA and UB are the derivatives
of the utility functions, marginal utilities.

It tells us that:
The condition is that marginal contributions to social welfare
from each individual’s consumption are equal. Therefore when maximizing a utilitarian social welfare function, if the individuals have the same utility functions,
social welfare maximisation implies equal consumption levels.

Question 13

Equal consumption levels for welfare maximization is not the general case. It is not the result if?

Answer 13

• the SWF (social wellfare function) is linear with unequal weights and the U function are the same: or
• the SWF is linear with equal weights and the U functions differ. fx if if A gets more utility than B for the same level of consumption, because individual A is more “efficient” at turning consumption into utility - is a better “pleasure machine”.

Question 14

What kind of assumption is wellfare economics based on, when it’s based on the idea of utilitarianism?

Answer 14

The kind of utilitarianism that welfare economics is based on has it
that individuals are the best judge of what is good or bad for them,
so that individuals’preferences tell the analyst what is good for
individuals.

Question 15

List some criticism of preference-based utilitarianism?

Answer 15

Two lines of criticism of this particular version of utilitarianism
can be distinguished:

• Taking preferences as given and truly reflecting interests, is it
  reasonable to assume that individuals generally have enough
  information to assess the implications for their utility of the
  alternatives open to them?
• Is it reasonable to assume that, in a world where socialisation
  processes and advertising are pervasive, peoples’ preferences
  do truly reflect their interests?

Amartya Sen distinguishes between altruism as ‘sympathy’ and ‘commitment’.
* Sympathy is where my concern is reflected in arguments in my utility function, so that if a change improves the lot of relevant other(s), my
utility increases.
* Commitment is where my concern is based on my ethical principles, which may lead me to approve
of change that reduces my utility.

Individuals exist as both consumers and citizens.

Question 16

How is John Rawls criticizing the classical utilitarianism?

Answer 16

John Rawls (1971) objects to classical utilitarianism on the
grounds that simply maximising the sum of individual
utilities, and ignoring their distribution, could lead to
outcomes that violate fundamental rights. This is idea is called “A Theory of Justice”, by Rawls.

Question 17

Descirbe Rawls: A Theory of justice

Answer 17

Rawls looks to establish the principles of a just society by
asking what would be agreed by everyone if we could freely,
rationally and impartially consider just arrangements. To do
this, he uses the ‘original position’, in which individuals exist
behind a ‘veil of ignorance’– no person has knowledge of what
their circumstances would be in the world for which they must
design a ‘social contract’.

Rawls claims that behind the ‘veil of ignorance’ there would
be unanimous agreement on two fundamental principles of
justice:
* Each person to have a right to the most extensive liberty
compatible with the same for others
* Social and economic inequalities to be arranged so that they
are (a) expected to be to everyone’s advantage and (b)
attached to positions and offices open to all

The second of these is the Difference Principle. It asserts that
inequalities are justified only if they enhance everyone’s
position – if they lead to Pareto improvements.

Question 18

What is the Rawlsian case?

Answer 18

• For η= 0, the SWF on iso-elastic U functions treats an extra unit
  of consumption equally across individuals. No aversion to
  inequality at all
• For η = 1, it treats equal proportional increases in consumption
  equally across individuals. The marginal social utility of
  consumption for person i is inversely proportional to that
  person’s level of consumption, dW/d X_i =1/ X_i
• For η > 1, it treats an x% increase for the poorer person as more
  welfare-increasing than x% for the better-off person.

As η goes to infinity, small U increases for the worst-off get
weighted much more than large U increases for the better-off. In
the limit, increases in U for the better-off have no effect on
welfare.

Question 19

How does the size of the utility discount rate affect the climate, when we are looking at intertemporal distribution in a utilitarianism view?

Answer 19

In intertemporal distribution, discounting future utility helps address questions like how much we should invest in mitigating climate change today to prevent harm in the future or how to balance consumption now against savings for future consumption. It reflects the trade-offs between present and future welfare.

However, the choice of discount rate has ethical implications, especially in long-term policy considerations such as climate change, where the benefits of actions taken now may not be realized for many years or even generations. A high discount rate could justify less investment in future benefits (e.g., less aggressive climate action), as it makes future benefits seem smaller when converted to present value. Conversely, a low discount rate increases the weight of future benefits and costs, advocating for more substantial immediate sacrifices for the sake of future generations.

Question 20

How do we understand the discount rate of future utility in general?

Answer 20

The discount rate of future utility is a concept used in economics and finance to adjust the value of future benefits or costs to their present value. It reflects the idea that, due to various reasons such as risk, opportunity cost of capital, inflation, and individual time preference, people generally value a benefit received today more than the same benefit received in the future. The discount rate quantifies this decrease in value over time.

When applied to future utility, the discount rate is used to calculate the present value of future utility gains or losses. This is especially relevant in long-term decision-making processes, such as planning for retirement, evaluating investments, or assessing the costs and benefits of environmental policies that have effects far into the future. The higher the discount rate, the less future utility is valued compared to present utility.

Question 21

How is the use of p > 0 morally justified by the descriptive and perspective school?

Answer 21

According to the Descriptive school of thought in economics, ρ> 0 is required by the
logic of preference satisfaction which underpins all economics – individuals are observed to prefer current to future consumption, to exhibit positive time preference. This sustain the idea, that a live today is more valuable then a live in a future generation (video)

According to the Prescriptive school of thought, there is no ethical basis for policy to reflect individual preferences in this way (cf. Sen on citizens and consumers)– people alive at different dates should have their utilities treated
equally.

This does not imply using ρ = 0. At any point in time there is a small probability that the human species will go extinct. The probability increases with time, implying, given reasonable assumptions, exponentially declining utility weights.
* The Prescriptive approach is taken to mean ρ of the order of 0.001, 0.1%.
* The Descriptive approach is taken to mean ρ of 0.015-0.03, 1.5-3%.

The difference matters a lot– more on this later in the course.

Question 22

How does ethics have an effect on climate change? Example the Stern Review

Answer 22

As compared with most previous economic analyses, the Stern Review (2006) recommended stronger and earlier mitigation action. It was explicit that this was largely driven by its ethical position, as reflected in the values used for the utility discount rate ρ and the elasticity of marginal utility η in the iso-elastic utility
function.

Ethical Considerations:

Intergenerational Equity: Climate change poses significant ethical questions about the responsibilities of current generations to future generations.

Justice and Fairness: Addressing climate change must consider issues of justice, both within and between countries, ensuring that the burdens and benefits of action are distributed fairly.

The Stern Review concludes that the benefits of strong, early action on climate change far outweigh the costs. It emphasizes the need for a comprehensive global effort to mitigate and adapt to climate change, highlighting both the economic risks of inaction and the opportunities presented by a transition to a low-carbon economy.

Stern was criticised by a number of economists for using unreasonably low values
for both ρ and η.

Our Professor Frikk Nest has an article in the economic journal about this topic!

Question 23

How does Frikk Nesje describe the social discount rate

Answer 23

”The higher the social discount rate, the greater the benefit of climate investments must be for future generations in order for us to be willing to implement the investment. Thus, a high social discount rate means that we put less emphasis on future generations and their climate problems,” says Frikk Nesje.

Question 24

Does one percent extra or less have a big difference in the long term according to Frikk Nesje?

Answer 24

One per cent amasses a lot of money over time:
The models span several generations, and therefore a single per cent increase in the social discount rate may be of great significance. The higher the social discount rate, the higher return we demand from our current investments. Therefore, a high social discount rate also provides less leeway for climate investments today.

As climate economic models calculate the economic consequences of global temperature rises several generations into the future, the choice of the social discount rate is crucial. Even minor changes to the social discount rates can have major consequences for the economic scenarios – and thus for our willingness to invest in long-term climate solutions – from wind turbine farms to the phasing out of fossil fuels, taxation of CO2 emission and other climate initiatives.

“In fact, uncertainties about the social discount rate and other social science parameters are at least as important for the climate economic models as the scientific parameters,” emphasises Frikk Nesje.

Thus, in close collaboration with other economists, Frikk Nesje has helped to bridge the polarised perceptions of the social discount rate which climate economists should insert into the equations.

Based on a large survey among economists and other experts, the group concludes that a social discount rate of approximately 2 per cent is both a balanced and realistic bid.

And even more dramatic: When updating the DICE model with new climate data and the adjusted social discount rate, it actually makes economic sense to stay within the temperature rise of maximum 1.5 to 2 degrees which the countries of the world have committed to in the Paris Agreement. This is in stark contrast to William Nordhaus’ controversial view that a 3.5-degree temperature rise is economically optimal.

“For me, it is about being able to contribute with conceptual clarity, making it clear that there is not necessarily any major conflict between the economically optimal and the politically decided temperature goals in the Paris Agreement. That clarity is satisfactory.”

Question 25

How is the discussion between Nicholas Stern and William Nordhaus?

Answer 25

That uncertainty has created sharp fronts in the economic world. Most famous is the contradistinction between two of the world’s most high-profile climate economists, the Englishman Nicholas Stern from the London School of Economics and the American Nobel Laureate and developer of the Dynamic Integrated Climate-Economy model (the DICE model), William Nordhaus from Yale University.

Where Stern – based on ethical-philosophical deliberations and out of consideration for future generations – uses a low social discount rate of 1.4 per cent, Nordhaus has chosen a more market-based social discount rate of 4.5 per cent. Seemingly a modest difference, but with enormous consequences:

“If you use Stern’s social discount rate, today we will be willing to pay DKK 250 to get a climate return of DKK 1,000 in 100 years. If you use Nordhaus’ social discount rate of 4.5 per cent, we will only be willing to pay DKK 10.”

So, in this case, you may spend 25 times more on climate investments if you choose one social discount rate over the other?