Martin Weitzman, 1942-2019

I'm a little late to this news, but I was saddened to hear of the passing of the environmental economist Martin Weitzman a few weeks ago. The New York Times has a wonderful obituary that nicely summarises Weitzman's contributions to economics. Those contributions were many, including:

In an earlier influential paper, written in 1974, Professor Weitzman questioned the conventional view among economists that taxing pollutants was a more effective way to curb them than setting limits on how much pollution could be generated.

He argued that each approach created its own ambiguities: Levying a tax makes it easy to predict the cost of the policy, but not how much companies will continue to pollute. Imposing a cap makes the amount of pollution quantifiable, but not the cost.

His analysis helped lay the groundwork for the so-called cap-and-trade alternative, which imposes a ceiling on pollutants but lets companies set the price in the marketplace by trading permits to pollute within those caps. Cap-and-trade programs have helped reduce acid rain pollution in the United States and are being used to tackle climate change in California and the European Union.

This week in my ECONS102 class we covered the economics of pollution control, and Weitzman's work noted above is a key contribution to the topic. I also blogged about this back in 2015, but without reference to Weitzman. Understanding the theoretical equivalence of tradeable pollution permits and Pigovian taxes, and the benefits and limitations of those two options, is important.

Many economists were surprised that he didn't win the Nobel Prize, especially when it was awarded to William Nordhaus for his work on environmental economics (among other things). Apparently this hit Weitzman quite hard:

Colleagues said that Professor Weitzman had been despondent after he did not win the Nobel, and that his emotional state worsened in the spring, when, in a rare instance in his career, a fellow economist pointed out a mistake in a completed but unpublished paper that Professor Weitzman had circulated.

In a typewritten note that was found after his death, Professor Weitzman said his capacity to solve the kinds of difficult problems to which he had devoted his career was diminishing.

The saddest part of the story of Weitzman's passing may be that he was the second top economist this year to have taken their own life (after Alan Krueger). You can read more about Martin Weitzman's work on Wikipedia, or Bloomberg News or The Economist. He will be a great loss.