More Common Sense

Via Freakonomics, a dose of common sense from the IMF regarding the circus in Copenhagen:

The science of the issue can get pretty incomprehensible pretty quickly. And the politics are clearly very ugly. Let’s not forget, however, that much of the economics is simple.

It’s an externality, stupid — so price it.

I am currently reading William Nordhaus's Question of Balance. He and his colleagues have developed a comprehensive and useful model for comparing the costs of various climate change scenarios and policies to ameliorate them. While I will have more to say on Nordhaus's work later, in brief, it largely reflects the above; internalize externalities so that social costs are taken into account.