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Senate Testimony Quotes Bob Litterman on Carbon Dividends

February 7, 2019
"(F)or society at large, and the government in particular, the most important and urgent action required is to minimize future warming by creating appropriate global incentives to reduce carbon dioxide emissions from burning fossil fuels. Economists generally agree that rather than regulate behavior, it is more effective to allow individuals to choose their actions, as long as the prices appropriately reflect the costs, including the risks posed by climate change.

To date prices of energy have not reflected the risk of future climate damages. This is a stupid mistake..."

                                                                                                                                                                                             -NYT Op-ed 01/29/2019

On February 6, Senator Sheldon Whitehouse quoted alumnus Bob Litterman's ('80) recent op-ed published by the New York Times.

Senator Whitehouse's testimony also cites the January Wall Street Journal op-ed signed by 27 Nobel Laureates and dozens of other economists that have held prominent policy positions. Signers with Minnesota connections include Nobel Laureate alumni Daniel McFadden ('62) and Lars Peter Hansen ('78) as well as Nobel Laureate former faculty members Thomas Sargent and Christopher Sims.

"A carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary. By correcting a well-known market failure, a carbon tax will send a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future."

"To maximize the fairness and political viability of a rising carbon tax, all the revenue should be returned directly to U.S. citizens through equal lump-sum rebates. The majority of American families, including the most vulnerable, will benefit financially by receiving more in “carbon dividends” than they pay in increased energy prices."

                                                                                                                                                                                             -WSJ Op-ed 01/16/2019