Kenneth Arrow Starts Off 2009 Big Thinkers Series

Yahoo! Labs kicked off its 2009 Big Thinkers Series on Wednesday with Dr. Kenneth Arrow, Nobel Laureate and Professor Emeritus of Economics at Stanford University. Arrow addressed an elbow-to-elbow standing room only crowd for his talk at Yahoo!’s Mission College campus in Santa Clara, possibly the most highly-attended in the entire series to date.

Arrow discussed how economic growth is due to investment in the future – that production takes place over time, with the output arriving much later. The same can be said about climate change - most of the benefits of combating global climate change will occur 100 years from now. “Little of all we value here wakes on the morn of the 100th year,” says Arrow, quoting Oliver Wendell Holmes.

Arrow then discussed the notion of discounting the future – how we often discount the future and consider it less important that the present because of three main reasons: a) the world is getting richer and not as valuable when you’re poor; b) people that are far away in time or distance don’t count; and c) if you do save, you get a return – you get back more than you put in. This is central to the findings in the Stern Report on the Economics of Climate change that substantial immediate action on climate change is likely to be much cheaper over the long-term.

“Every capital you put aside yields you a return. What that return is may change from time to time,” says Arrow. “This has been stressed for climate change.”