St.Petersburg Economic seminar (HSE, EU, PDMI) on February, 17: Igor Sloev (EUSP)
Topic: Optimal level of mitigation catastrophes
Date & Time: February, 17; 18:00 - 19:00
Where: St. Petersburg, Shpalernaya St, 1 (EUSP) & online platform Zoom
Time: 18:00 - 19:00
Abstract: We propose a simple dynamic model in which society faces a possibility of occurrence of a catastrophe. Catastrophe leads to welfare losses by death of a fraction of population. We assume that expected losses (expected fraction of population that dies due to catastrophe) is a function of a society's costly effort. The cost of effort is a reduction in an individual per-moment consumption. We find an optimal solution, that is the optimal level of effort, which maximizes social welfare, and study its properties. In addition, we compare the properties of the optimal solution with properties of Willingness To Pay for (full or partial) catastrophe avoidance, the metric wildly used in modern environmental economics literature.
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