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Visionary Science, Ethics, Law and Action in the Public Interest

In Pursuit Of A Better Economics

This year’s Leontief Prize, issued by the Global Development and Environment institute at Tufts, honors economists challenging conventional thought on climate change.

Medford/Somerville, Mass. [10.18.07] With Al Gore and the United Nations receiving the Nobel Peace Prize for their efforts to address climate change, the issue of global warming is topping the headlines once again. This year’s Leontief Prize for Advancing the Frontiers of Economic Thought honors two economists, for their work at the intersection of climate change policy and international economic development.

“Our goal is to recognize the economists who are innovating in a direction we’d like to see the whole profession go,” says economist Frank Ackerman, co-director of Tufts’ Global Development and Environment Institute (GDAE), which sponsors the prize.

The theme of this year’s prize, “Climate Change, Economic Development, and Global Equity,” was chosen because of the emergence of climate change as a dominant issue in environmental economics. Ackerman says that the recipients, Jomo Kwame Sundaram (Jomo K.S.) and Stephen DeCanio, are being honored for their innovative views that challenge “textbook economics.” The Oct. 17 awards ceremony featured lectures by the prize winners.

DeCanio, professor of economics at the University of California, Santa Barbara, became interested in climate economics as a senior staff economist on President Reagan’s Council of Economic Advisers. The negotiation of the Montreal Protocol, an international agreement enacted in 1989 to enforce protection of the ozone layer, introduced him to the critical issues at hand.

“I was so immersed in that, both fascinated by the possible use of economics to solve these global problems and also frightened by how close it was to essentially losing the ozone layer,” recalls DeCanio.

He believes that economic theories must work in tandem with “a moral commitment to the future generations,” a theme he explored in his talk at the awards ceremony. Many of the prominent theories in climate economics today focus too much on cost-benefit analysis, he says, and not enough on the real-world implications of climate change.

“Every scientist knows it’s the intergenerational element that matters,” DeCanio explains. “People have to realize that if they care about their descendents and future generations they have to shift thinking to frame the problem as what is our duty to them as opposed to a simple question of how much we would have to invest.”

Jomo K.S., assistant secretary general for economic development in the United Nations’ Department of Economic and Social Affairs, is an influential Malaysian economist who studies the economics of developing nations. He says that this year’s focus on the relationship between climate change and development is critical.

“There’s a great deal of concern among many developing countries that new concerns with climate change will be invoked to deprive them of developmental opportunities,” explains Jomo, who focused on questions of equity with regard to climate change and developmental concerns in his talk. “These concerns are not without justification, but at the same time, if the conversations address these kinds of concerns it will be much easier to build a broad international consensus around ensuring that future development becomes more climate friendly.”

The Leontief Prize is named for Wassily Leontief, a Nobel Prize-winning Russian economist and member of GDAE’s external advisory board from 1993 until his death in 1999. GDAE began awarding the prize in 2000.

“Despite his own remarkable achievements, [Leontief] always maintained a certain humility and was always concerned that economics be relevant,” says Jomo, who came to Harvard for graduate school shortly before Leontief left to teach at New York University.

Leontief’s legacy, says Ackerman, encourages innovative thinking on topics such as climate change that the work of DeCanio and Jomo has exemplified.

“Economics that is in touch with reality, as Leontief’s own work always was, leads to an analysis of climate change that is congruent with the scientific understanding and urgency of the problem,” he explains.

It is this commitment to the real-world usefulness of economic theory that is at the heart of the awards. By honoring both a climate economist and a development economist, Jomo says that Tufts is bridging an important gap in the dialogue on climate change.

“Particularly in the Western world, we tend to find questions of environment and ecology treated rather separately from development,” he says. “What Tufts has done by setting up such an institute [as GDAE], which has already placed itself on the map so early on, has been extremely important in bringing two sometimes disparate conversations together. Tufts has played a leading role in this regard.”

“Tufts is recognized as one of the places where this work is done,” adds DeCanio. “It’s very much part of the mission of Tufts.”

Ackerman hopes that leadership translates to a broader shift away from what he calls the “economics of inaction” and toward real progress in addressing climate change.

“None of the science says that this is a time for timidity and gradualism,” says Ackerman. “It says this is a time for bolder action.”

Copyright © 2007, Tufts University