The 20th century saw unprecedented gains in global welfare. From 1900-2015, life expectancy more than doubled (from 30 years to over 70), literacy rates more than tripled (from 21% to 86%) and the proportion of people living in extreme poverty fell from 67% to 9%. But alongside these indisputable improvements in the human condition, the global economic system also generated 1.5 trillion tonnes of CO2 emissions. It is now clear: business as usual will cause climate catastrophe with the potential to wipe out a century of progress.
Presenting their most recent research, the Bennett Institute’s Matthew Agarwala and Dimitri Zenghelis argue that misleading statistics can help explain how the 20th century economic model got progress so wrong, and discuss how to fix it. Results show that 21st century sustainability cannot be measured with 20th century statistics: as economies evolve, so too must our tools of measurement.
Indicators like GDP provide only a partial (and potentially misleading) view of modern economies. Crucial omissions include issues of sustainability, human wellbeing, and inequality.
Agarwala asks ‘Who is responsible for global emissions? Producers and exporters like China and India? Or importers and consumers, like the UK and US? Or is the world simply unfair, and responsibility to act lies with those who will suffer the damages?’ He shows that the answer to these questions fundamentally changes our understanding of the sustainability of nations.
Zenghelis argues that by relying on backwards looking, incomplete models and statistics, economists not only get the future wrong, they make the future wrong. To the extent that they are believed, their assumptions – from the relevance of GDP growth to the importance of fossil fuels – become self-fulfilling. Overstating the costs of decarbonisation, and understating the costs of climate change discourages governments and businesses from pursuing green investments. This starves the renewables sector of crucial funding, slowing the rate at which costs fall, and actually makes decarbonisation harder.
But all is not lost. This discussion presents new ways of measuring carbon in the global economy, uncovers the distributional effects of climate change, and explains how economists can both get and make the future right.
In a world characterized by change – social, technological, political – the Bennett Institute for Public Policy is delighted to welcome you to explore the ethics of climate change, re-draw the map of global emissions, and make the case for conditional optimism and a carbon neutral future.
Matthew Agarwala and Dimitri Zenghelis lead the Bennett Institute’s Wealth Economy Project: Natural and Social Capital, which is funded by LetterOne.
This is a Festival of Ideas event – booking will open on the Festival website on 23 September.
The 2019 Cambridge Festival of Ideas will take place 14-27 October