Claude Henry, Ecole Polytechnique, Paris
Werner Heisenberg’s most famous contribution to quantum mechanics is the Uncertainty Principle, that bears his name. When formulating the principle, he was unaware of the Treatise in Probability published a few years before by John Maynard Keynes. There Keynes makes a sharp distinction between risk, ie uncertainty fully structured by objective probability distributions, and genuine uncertainty. Quantum mechanics is in the risk category.
With sciences like climatology, ecology, medicine, oceanography, the situation is radically different: to various extents they are genuinely uncertain. For the last twenty years, scientists (including economists) have developed structured and rigorous approaches to deciding under genuine uncertainty, ie approaches for making proper use of a body of uncertain information (generalizations of the von Neumann-Morgenstern decision framework under risk, advanced warning signals of the proximity of a tipping point,…). Reinsurance companies have followed suit.
However, from George Akerlof, Michael Spence and Joseph Stiglitz’ asymmetric information models, economists are well aware that a frequent winner is not he or she who is good, but rather who merely looks good while avoiding the cost of actually being good. This strategy has too often been successfully implemented in disguising science - and indeed fabricating uncertainty – be it the science of the health hazards of tobacco, the science of the ozone hole, of climate change or even of the “nuclear winter”.
About the speaker
Physicist turned economist, he has been at Ecole polytechnique, Paris, for more than 30 years as professor and head of research in economics. During that period, he has been co-editor of the Review of Economic Studies and then of the Journal of Public Economics. He has also served for 5 years in the Conseil d’Analyse Economique under Prime minister Lionel Jospin.
He is now professor at Sciences-Po, Paris, and at Columbia University in the City of New York, specializing in innovation and environmental economics. He is a fellow of the Econometric Society and a member of the Academia Europea.
Venue: UNU-MERIT Conference Room
Date: 12 May 2011
Time: 12:30 - 13:30