Notes

1 Introduction

1 . The term is from Kahneman (2013), “The Behavioral Foundations of Public Policy,” in Shafir, The Behavioral Foundations . In this book we use the colloquial term “behavioral economics.”

2 The Political Economic Framework

1 . Sen (2009), The Idea of Justice (Allen Lane and Penguin), groups Marshall, Edgeworth, and Pigou with the utilitarians.

2 . In Great Britain the key sources are National Grid (e.g., NG; 2014), “UK Future Energy Scenarios—UK Gas and Electricity Transmission” and the Department of Energy and Climate Change (e.g., HMG, 2010), 2050 Pathways Analysis .

3 . The term is from Reid (2012), Scottish and Southern—various “smart grid” fora.

4 . Hutcheson (1725), “Inquiry Concerning Moral Good and Evil,” in Leidhold. W. (ed.) The Collected Works and Correspondence of Francis Hutcheson (Natural Law and Enlightenment Classics ebook: Liberty Fund, Indianapolis)

5 . See Wesley (1918), “Bentham’s Felicific Calculus,” Political Science Quarterly 33 (June).

6 . For a description, see Birks (1874) “Modern Utilitarianism” (Elibron Classics, Adamant Media Corporation).

7 . Quoted in Sunstein (2014), Why Nudge—the Politics of Libertarian Paternalism (Yale University Press).

8 . Rawls divides primary goods into natural, such as health and intelligence, and social, such as freedom, justice, and income.

9 . The term is from Anscombe (1958), “Modern Moral Philosophy,” Philosophy 33: 1–19.

10 . The quote is generally regarded as a synthesis from Machiavelli (1513), The Prince (Penguin: UK). The actual quote is probably drawn from a poem by Prior (1718), Hans Carvel—The Poetical Works of Matthew Prior (London, UK: Bell and Daldy). The earliest known example of a similar quote is in Sophocles (BCE 409), in the chorus to “Electra,” in Electra and Other Plays (UK: Penguin Classics).

Notes236

11 . E.g., Finnis (2011), Natural Law and Natural Rights (Oxford, UK: Oxford University Press).

12 . This is explored in Dawkins (2006), The God Delusion (Black Swan). 13 . See Simmons (2013), Central Issues in Jurisprudence , 4th ed. (UK: Sweet

and Maxwell), for an exposition on this. 14 . The term is from Coyle (2014), Modern Jurisprudence: A Philosophical

Guide (Oxford, UK: Hart Publishing). 15 . Mill (1843), A System of Logic (FQ Books), chapter 2, book 6. 16 . The act-rule categorization began with Smart (1956), “Extreme and

Restricted Utilitarianism,” The Philosophical Quarterly VI: 344–54. His terms “extreme” and “restricted” correspond to “act” and “rule.” It was Brandt’s terminology that stuck.

17 . Bentham (1879), Introduction to the Principles of Morals and Legislation (Dover Philosophical Classics).

18 . The term is from Brandt (1959), Ethical Theory (Englewood Cliffs, NJ: Prentice Hall).

19 . Bowring (1838), The Works of Jeremy Bentham , 11 Vols (Adamant Media Corporation), II p 491.

20 . See Miller (2014), “Rule Utilitarianism,” in Eggleston and Miller, The Cambridge Companion to Utilitarianism .

21 . The term is from Gardner (2013), “Finnis on Justice,” in Keown and George, Reason, Morality and Law .

22 . Friedman (1962), Capitalism and Freedom , 40th anniversary edition (2002), (The University of Chicago Press).

23 . Sunstein (2014). 24 . See Brittan (1988). 25 . Both quotes are from Friedman (1962). 26 . Bentham (1834) coined the term and described the etymology as from

“to deon,” “that which is proper,” and “logia,” “the knowledge of what is right and proper,” but “duty” is the most commonly used meaning now. Deontology or The Science of Morality , Vol. I (Edinburgh, UK: Longman, Rees, Orme, Browne, Green and Longman), (Authorised Microfilm Reprint, University Microfilms Inc., Ann Arbor, Michigan, 1961).

27 . See Rothbard (1978), For a New Liberty—The Libertarian Manifesto (Auburn, AL: Ludwig von Mises Institute), for an exposition of this approach.

28 . The term is from Rothbart (1943), “Note on a Method of Determining Equivalent Income for Households of Different Composition,” in Madge, War-time Pattern of Savings and Expenditure .

29 . E.g., Black et al. (1980), “1980 Report of the Working Group on Inequalities in Health” (Pelican Series, Penguin Books, 1982), ISBN 0–14–022420–3.

30 . From Atkinson (1983), The Economics of Inequality (Oxford, UK: Clarendon Press).

31 . Mack, J. and Lansley, S. (1985), Poor Britain (London: George Allen and Unwin). Frayman (1991), “Breadline Britain”—1990’s—The Findings

Notes 237

of the Television Series, London. Domino Films and London Weekend Television. Black et al. (1980).

32 . See Black et al. (1980).

3 Economic and Market Framework

1 . Samuelson (1958), “An Exact Consumption-Loan Model of Interest With or Without the Social Contrivance of Money,” Journal of Political Economy 66: 467–82. Each person lives for two periods and the genera-tions overlap.

2 . Garnier (1796), Abr é g é El é mentaire des Principes de l’Economie Politique , 2nd ed. (Paris, France: St Agasse). Say (1828), Cours Complet d’Economie Politique Pratique (Paris, France: Rapilly), as explained in Ekelund and H é bert (1999), Secret Origins of Modern Microeconomics. Dupuit and the Engineers (Chicago Press).

3 . Dupuit (1844) “De la Mesure de l’Ulitit é des Travaux Publics,” Annales des Ponts et Chauss é es , 2nd series, vol. 8. Translated by R. H. Barback (1952), in International Economic Papers 2: 83–110. Reprinted “On the Measurement of the Utility of Public Works,” in Arrow and Scitovsky, Readings in Welfare Economics .

4 . E.g. Ruggles, N. (1949) “Recent Developments in the Theory of Marginal Cost Pricing” Review of Economic Studies 17 :107–26. Dr è ze (1964), “Some Postwar Contributions of French Economists to Theory and Public Policy,” American Economic Review , supplement 54: 1–64.

5 . Most commonly called Pen’s parade, after Pen (1971), Income Distribution (London, UK: Allen Lane).

6 . Kaldor (1939), “Welfare Propositions and Economics and Interpersonal Comparisons of Utility,” Economic Journal 49.145: 549–52. Hicks (1939), “The Foundations of Welfare Economics,” Economic Journal 49.196: 696–712.

7 . Clarke, E. H. (1970) “Multipart Pricing of Public Goods,” Public Choice 11:17–33

8 . Groves, T. (1971) “The Allocation of Resources under Uncertainty: the Information al and Incentive Roles of Prices and Demands in a Team” (PhD dissertation. University of California, Berkeley USA).

9 . Sidgwick (1901), The Principles of Political Economy , 3rd ed. (Forgotten Books) and then Pigou (1932) used the example, preceding Samuelson’s approach.

10 . The term was coined by Krutilla (1967), “Conservation Reconsidered,” American Economic Review 57: 777–86.

11 . Weikard (2002), “The Existence Value does not Exist and Non-use Values are Useless,” paper prepared for the annual meeting of the European Public Choice Society (Belgirate – Lago Maggiore, Italy).

12 . Lucas, R. E. (1972). “Expectations and the Neutrality of Money.” Journal of Economic Theory 4:103–24.

Notes238

13 . Galton (1907), “The Wisdom of Crowds,” Nature No 1949 75: 450–51.

14 . Originated by Muth (1961), “Rational Expectations and the Theory of Price Movements,” Econometrica 29.3: 315–35. Developed by Lucas (1972), in relation to the rational discounting of inflation, and developed further from there.

15 . US Treasury bonds. On some representations, the trend is intact when we look back all the way to the year 1000. Newell and Pizer (2001), “Discounting the Benefits of Climate Change Mitigation,” Pew Centre for Global Climate Change Economics Technical Series.

16 . Ferguson (2008), The Ascent of Money—A Financial History of the World (London, UK: Allen Lane).

17 . Girsanov’s theorem and the Radon-Nikodym derivative. See Baxter and Rennie (1996), Financial Calculus (Cambridge, UK: Cambridge University Press).

18 . The metaphor is standard and the example is drawn from Ellsberg (1961), “Risk, Ambiguity, and the Savage Axioms,” Quarterly Journal of Economics 75.4: 643–69; and Keynes (1921), “A Treatise on Probability,” 2014 ebook ed. (Gutenberg Library, Germany). Keynes drew from Boole (1854), An Investigation of the Laws of Thought (Watchmaker Publishing).

4 Core Welfare Modeling Factors

1 . Broadly mapping to what Mill (1871) referred to as “lower goods.” 2 . E.g. Jevons (1871). 3 . Dodds, N. (1985), The Sociology of Money (Cambridge, UK: Polity

Press). 4 . Habermas, J. (1987), The Theory of Communicative Action , vol. II

(Cambridge, UK: Polity Press). 5 . Misgeld (1985), “Critical Hermeneutics versus Neoparsimoniasm,” New

German Critique 35: 55–82. 6 . First measured in this context by Allais (1953), “Le Comportement de

l’Homme Rationnel devant le Risque, Critique des Postulats et Aximpoes de l’Elcole Americanine,” Econometrica 21: 503–46.

7 . This is a strange effect but is supported by empirical evidence. See Tversky and Kahnemann (1983), “Extension versus Intuitive Reasoning: The Conjunction Fallacy in Probability Judgment,” Psychological Review 90.4: 293–315.

8 . Kahnemann and Knetsch (1992), “Valuing Public Goods: The Purchase of Moral Satisfaction,” Journal of Environmental Economics and Management 22: 57–70.

9 . Gilbert (2007), Stumbling on Happiness (London, UK: Harper Collins). Kahneman and Snell (1992), “Predicting a Changing Taste: Do People Know What They Will Like?” Journal of Behavioral Decision Making 5: 187–200.

Notes 239

10 . Desvouges et al. (1992), Measuring Nonuse Damage with Contingent Valuation: An Experimental Evaluation of Accuracy (RTI Press).

11 . Kahneman et al. (1999), Economic Preferences or Attitude Expressions? An Analysis of Dollar Responses to Public Issues,” Journal of Risk and Uncertainty 19, 1–3: 203–35.

12 . After Arrow (1965), Aspects of the Theory of Risk Bearing,” in Arrow, Essays in the Theory of Risk Bearing . Sometimes also after de Finetti (1952), “Sulla preferibilit à ,” Giornale degli Economisti NS 11: 685–709, who showed the same result.

13 . See Gollier, C. (2004), The Economics of Risk and Time (MIT Press). 14 . From Machina and Viscusi (2014), Handbook on the Economics of Risk

and Uncertainty , vol. I (Elsevier BV). 15 . See, for example, Sunstein (2013), “Is Misfearing the Problem, Is Cost-

Benefit Analysis the Solution?” in Shafir, The Behavioral Foundations ; or Loewenstein, John, and Volpp (2013), “Using Decision Errors to Help People Help Themselves,” In Shafir, The Behavioral Foundations .

16 . Binmore (2005), Playing Fair—Game Theory and the Social Contract (Cambridge, MA: MIT Press). Beckerman (2011), Economics as Applied Ethics: Value Judgements in Welfare Economics (Hampshire, UK: Palgrave Macmillan).

17 . See Benartzi, Peleg, and Thaler (2013), “Choice Architecture and Retirement Saving Plans,” in Shafir, The Behavioral Foundations .

18 . Strotz (1956), “Myopia and Inconsistency in Dynamic Utility Maximisation,” Review of Economic Studies 23: 165–80.

19 . See Harrison (2010), “Valuing the Future: The Social Discount Rate in Cost-Benefit Analysis,” Visiting Researcher Paper—Productivity Commission (Canberra) ISBN 978–1–74037–313–5, for an excellent review.

20 . The number use is by Stern (2006), “The Economics of Climate Change” (UK National Archive, Web Archive).

21 . See for example, Quirk and Terasawa (1987), “The Choice of Discount Rate Applicable to Government Resource Use,” Prepared for the Director, Program Analysis and Evaluation (RAND publication series) ISBN-0–8330–0849–8.

22 . The term is from Robertson (1952), Utility and All That, and Other Essays (UK: George Allen and Unwin).

23 . E.g. Creti and Fabra (2004), “Capacity Markets for Electricity,” Center for the Study of Energy Markets (CSEM) (University of California Energy Institute).

24 . Kealhofer, McQuown, and Vasicek (KMV). The KMV company was bought by the credit rating agency Moodys.

25 . See Cochrane (2001), Asset Pricing (Princeton, NJ: Princeton University Press).

26 . CMO (2013), Annual Report of the Chief Medical Officer “Public Mental Health Priorities—Investing in the Evidence.”

Notes240

27 . Sunstein and Thaler (2009), Nudge (London, UK: Penguin). 28 . Hayes et al. (1968). 29 . Sinclair, C., Marstrand, P., and Newick, P. (1972). Innovation and Human

Risk: The Evaluation of Human Life and Safety in Relation to Technical Change (London: Centre for the Study of Industrial Innovation).

30 . Zeckhauser (1970), “Uncertainty and the Need for Collective Action,” in Haveman and Margolis, Public Expenditures and Policy Analysis .

31 . See Weinstein (2005), “Spending Health Care Dollars Wisely: Can Cost Effectiveness Analysis Help?” (Center for Policy Research) Paper 13.

32 . Thaler and Rosen (1976), “The Value of Saving a Life. Evidence from the Labor Market,” Household Production and Consumption (National Bureau of Economic Research), 265–302.

33 . Sunstein (2014), Why Nudge—The Politics of Libertarian Paternalism (Yale University Press).

34 . ONS (2014), “Office of National Statistics Compendium of UK Statistics—Economy.”

35 . NICE (2013), National Institute for Health and Care Excellence Centre for Health Technology Evaluation—Consultation Paper—Value Based Assessment of Health Technologies” (UK Department of Health).

36 . See Nord (1999), Cost-Value Analysis in Health Care: Making Sense Out of QALYs (Cambridge, UK: Cambridge University Press), for an exposi-tion of this.

37 . From Engel’s 1895 study of the proportion of income spent on different goods. See Lewbel (2006), “Engel Curves,” in Blume and Durlauf, The New Palgrave Dictionary of Economics .

38 . See DEFRA (2009), Guidance on How to Measure and Report Your Greenhouse Gas Emissions , published by the Department for Environment, Food and Rural Affairs. PB13309.

39 . See Willig (1976), “Consumer’s Surplus Without Apology,” The American Economic Review 66.4: 589–97, for a more thorough exposition.

40 . See Harris (2014), Fixed and Variable Costs: Theory and Practice in Electricity (Palgrave), for a detailed exposition.

41 . From Maskin (2014), “The Arrow Impossibility Theorem: Where Do We Go From Here?” in Maskin and Sen, The Arrow Impossibility Theorem .

5 Current Topics in Electricity

1 . See Harris (2006), Electricity Markets: Pricing Structures, Economics (Wiley), for an explanation of thermally generated power.

2 . Term from Douglass (2011), Western Power Distribution—various “smart grid” fora.

3 . See the works of Boiteux and Mass é , in particular. 4 . See Harris (2014), Fixed and Variable Costs: Theory and Practice in

Electricity (Palgrave). 5 . See Sunstein (2014), Why Nudge—The Politics of Libertarian Paternalism

(Yale University Press), for a discussion.

Notes 241

6 . FPAG (2012), “Fuel Poverty Advisory Group of England—Tenth Annual Report 2011–12.”

7 . Isherwood and Hancock (1979), “Household Expenditure on Fuel: Distributional Aspects”: Economic Adviser’s Office, DHSS (London). Townsend (1979), Poverty in the United Kingdom (London, UK: Penguin).

8 . See Orwell (1937), The Road to Wigan Pier (Penguin), on this. 9 . CMO (2009), Annual Report of the Chief Medical Officer “On the State

of Public Health.” See also Lawson (1997), Bills of Health (Oxford, UK: Radcliffe Medical Press).

10 . See Kulhavy (2009), “Can Energy Charges Encourage Efficiency?” (Ofgem, UK), www.Ofgem.gov.uk ., for a discussion of this structure as well as the related case for rising block tariffs.

11 . Ekins et al. (2009), “The Case for Green Fiscal Reform: Final Report of the UK Green Fiscal Commission,” ISBN-978–0–85374–839–7.

12 . See Seely and Twigger (1997), “VAT on fuel and power,” House of Commons Research Paper 97/98 (House of Commons Library, UK).

13 . Author’s term.

6 Conclusion

1 . Wesley (1918), “Bentham’s Felicific Calculus,” Political Science Quarterly 33 (June).

7 Technical Appendices

1 . Unpublished meta study by the author. 2 . See Harris (2015), Peak Load and Capacity Pricing: Theory and Practice

in Electricity (Palgrave). 3 . This is examined in detail in Harris (2015). 4 . Dr ă gulescu and Yakuvenko (2001), “Exponential and Power-Law

Probability Distributions of Wealth and Income in the United Kingdom and the United States,” Physica 299: 213–21.

5 . Pareto (1897), Cours d’Economie Politique (Paris, France: Librairie De l’Universit é Lausanne), noted the fit to his distribution.

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Author Index

Allais, 78n6Anderson, 168Anscombe, 13n9Arrow, 15, 39, 53, 83–4, 88, 103,

121–2, 170, 83n12Atkinson, 7, 221, 224, 36n30

Barro, 96Baumol, 48, 152Baxter, 61n3Bayes, 59, 86Beckerman, 94n16Beesley, 39Benartzi, 93n17Bentham, 6–7, 15, 26, 104, 16n17,

21n26Bergson, 89, 91–2Bernoulli, 39, 78, 212Beveridge, 168Binmore, 92n16Birks, 12n6Black, 36n29, 37n32Black, F., 39Blackorby, 7, 129, 221Boardman, 165–71, 201Boiteux, 158n3Boole, 63n18Bowring, 17n19Brandt, 16n16, 17n18Brazier, 168Brittan, 7, 25, 106, 24n24Buchanan, 7

Campbell, 81Clark, 50n7Coase, 7, 31, 48–51

Cobb Douglas, 227Cochrane, 106n25Conceição, 225Cowell, 128Coyle, 15n14Creti, 20n23Crisp, 73

Dalton, 7, 129, 224Dasgupta, 100Dawkins, 14n12, 17de Finetti, 83n12Debreu, 39, 53Desvouges, 82n10Diamond, 30Dixit, 39Dodds, 75n3Donaldson, 7, 129, 221Drăgulescu, 227n4Drèze, 210, 42n4Dublin, 108Dupuit, 78, 122, 42n3

Edgeworth, 7, 39, 75, 82, 119Ekelund, 42n2Ekins, 180n11Ellsberg, 63n18Engel, 113, 168, 113n37

Fabra, 104n23Fechner, 106, 212Ferguson, 57, 81, 57n16Ferreira, 225Finney, 168Finnis, 14n11Foster, 104, 169, 221

Author Index256

Franklin, 12Frayman, 36n31Frederick, 92Freese, 107Friedman, 7, 20, 20n22, 20n25Fujiwara, 81, 106Fuller, 22, 33

Galton, 53n13Gardner, 18n21Garnier, 42n2Giddens, 7, 64Gilbert, 81n9Gini, 128Girsanov, 39, 61n17Gödel, 139Gollier, 97, 218, 84n13Green, 217Greer, 169Groves, 50n8

Habermas, 75n4Hancock, 167n7Hardin, 51Harris, 101, 136n40, 142n1,

161n4, 214n2, 216n3Harrison, 96n19Harsanyi, 7Hausman, 3Hayek, 17, 39Hayes, 107n28Heath, 39Hébert, 42n2Helm, 3, 10Hepburn, 49, 98Herfindahl, 225Hicks, 49–50, 75, 82, 88, 110, 122–6Hills, 169–73, 201Hirshleifer, 100Hobbes, 7Holmes, 23Hull, 39Hume, 18Hutcheson, 12n2

Isherwood, 167n7

Jarrow, 39Jefferson, 18Jevons, 7, 15, 75, 2–4John and Volpp, 87n15

Kahneman, 7, 81n8, 81n9, 82n11Kahneman and Tvaersky (KT), 80,

84–5, 93Kaldor, 49–50, 49n6Kant, 14, 20–1Kealhofer, 105, 105n24Keynes, 63, 125Kirchoff, 158Klass, 24KMV, 105Knetsch, 81n8Knight, 2, 63, 201Krutilla, 5n10Kulhavy, 178n10

Lansley, 36n31Lawson, 214Layard, 214Lewbel, 113n37Lichtenberg, 31Lintner, 39, 104Little, 7Littlechild, 39Locke, 7, 8, 10Loewenstein, 87n15Lorenz, 128Lotka, 108Lucas, 53n12, 53n14

Machiavelli, 13n10Machina, 86n14Mack, 36n31Markov, 59Markowitz, 39, 82Marschak, 78Marshall, 7, 16, 26, 76, 89, 122–6,

131–3, 156, 199, 221Marstrand, 107n29Maskin, 138n41Massé, 158n3Mayraz, 214

Author Index 257

McPherson, 3McQuown, 105n24Meade, 29, 33Merton, 39Meyer, 39Mill, 29, 133, 104, 15n15, 67n1Miller, 17n20Misgeld, 75n5Mitchell, 5, 7, 10, 180Mooney, 107Morgenstern, 39Morton, 39Mossin, 39Muth, 53n14Myles, 89, 92, 133, 169

Newell, 97, 100Newick, 107n29Nickell, 214Nord, 109, 108n36Nordhaus, 100Nozick, 7, 18, 25

Oates, 48Orwell, 167, 168n8

Paine, 18Pareto, 49, 55, 227n5Pearce, 214Peleg, 93n17Pen, 5–3Perdue, 23Pigou, 7, 25, 43–50, 164, 180Piketty, 223Pindyck, 39Pizer, 97, 100Popper, 39, 72–3, 127, 172Posner, 23Pratt, 39, 82–4, 210Prior, 13n10

Quirk, 101n21

Rabin, 81Radon-Nikodym, 61n17Ramsey, 95–6, 100, 133, 137, 210–11

Rawls, 6, 12–13, 13n8, 20, 25–7, 129–31

Rennie, 61n17Ricardo, 7Robertson, 20n22, 75Robinson, 67, 88Rosen, 107, 37n32Rothbard, 7, 27n27Rothbart, 168, 32n28Rousseau, 20Rowntree, 35–6Ruggles, 42n4

Saez, 30Sala-i-Martin, 96Samuelson, 39, 51, 58, 75, 88–92,

40n40Say, 42n2Scitovksi, 121Seely, 180n12Sen, 7, 1–2, 16, 21, 25–6, 33, 104,

169–70, 225Shakespeare, 24Sharpe, 39, 104Shumpeter, 39Sidgwick, 7, 51n9Sinclair, 107n29Slutsky, 88Smart, 16n16Smith, 7, 18, 77, 120, 127Snell, 81n9Sophocles, 13n10Spencer, 16Stern, 96, 99–100, 99n20Stevens, 106Strotz, 93n18Sunstein, 7, 12n7, 102, 188, 20n23,

87n15, 106n27, 108n33, 162n5

Terasawa, 101n21Thaler, 7, 107, 188, 93n17,

106n27, 107n32Theil, 221–5Thorbecke, 169Tobin, 39Townsend, 127, 167

Author Index258

Tunstall, 217Tversky, 7, 79Twigger, 180n12

Ulph, 214

Vasicek, 105, 105n24Viscusi, 86n14von Neumann Morgenstern, 39,

78–84

Waddams, 168Wang, 168

Weber, 106, 212Weikard, 51n11Weinstein, 107n31Weitzman, 48, 96Wesley, 12n5, 199n1White, 168Williamson, 24Willig, 126n39Woodman, 180

Yakuvenko, 227n4

Zeckhauser, 107n30

Subject Index

abrogation of contract, 8, 201act ulitarianism, 16adequacy events, 149affine transformations, 70amenity, 165anchoring, 82Anthropogenic Uncertainty, 64antigone, 15Arrow’s Impossibility Theorem, 75,

137, 199Asset Classes, 55Austrian school, 39availability bias, 81

band of iron, 10basel convention on waste trade, 51Behavioral Insights Team, 106blackouts, 116, 144, 149, 166bliss point, 96, 211Brahmin, 76, 90, 122budget constraint, 109

California Electricity Crisis, 5Capital Asset Pricing Model, 104carbon dioxide, 3Carbon Reduction Commitment,

179Cardinal Club, 75cardinal utility, 74Central Limit Theorem, 58, 228choice architecture, 34Climate Change Committee, 34Climate Change Levy, 162Cognitive Ability, 201collective rule code utilitarianism, 17confirmation bias, 59

Consumer Sovereignty, 20Consumer’s Surplus, 122consumers’ surplus, 123contamination bias, 81contingent valuation, 199contractarian, 157Convexity Adjustments, 60Cost of Risk, 12, 39, 52, 56, 61, 84,

102–4Creon, 15cyber crime, 153

death spiral, 190DECC, 147decentralisation, 7, 10democratisation, 10deontological, 16, 17, 21, 26Department of Lagging, 179difference principle, 27diffidence, 84disconnection, 203Discounting the Future, 92Distribution of Wealth, 120, 127

ecfare, 103efficient breach, 24, 201egalitarian, 130–2election, 138electric vehicle, 146emigration, 29, 40endowment, 39–41, 70–1Energy Companies Obligation, 182entropy, 69, 143envy, 88eudaimonic, 12, 15, 103Excess Winter Deaths, 167

Subject Index260

existence value, 47expectation damages, 23expropriation, 8

Fabians, 28fallacy of conjunction, 81Feed in Tariff, 162Felicific Calculus, 12, 199first best, 104, 133First Theorem of Welfare

Economics, 120footprint, 157Fuel Direct, 184Fuel Mix, 159fuel poverty, 166–9Fuel Poverty Advisory Group, 34

Giffen good, 113gray mix, 159Green Book, 100Green Deal, 183Green Fiscal Commission, 180

Hamiltonian, 96Health Divide, 37hedonic, 12, 15, 107, 164hedonimeter, 106hindsight bias, 81HMRC, 154holdup, 9hypothecation, 178, 184

immigration, 41Incremental Cost Effectiveness

Ratio, 108independence of irrelevant

alternatives, 139inequality, 200Information Asymmetry, 63insensitivity to scope, 82intermittency, 144Interpersonal Comparability, 88invisible hand, 120

kernel methods, 59kettle, 144

latency, 144Latent Variable, 59Law of One Price, LOOP, 54, 92,

101Leviathan, 17Levy Exemption Certificates, 162leximin, 21Liberal Paternalism, 20LOLE, 150LOLP, 150loss aversion, 12, 72lower goods, 67n1

martingale, 61maximin, 21meme, 17Merchant of Venice, 24Mona Lisa, 217Money Metric, 103monistic law, 15moral algebra, 12Moral Hazard, 16, 23, 63, 87, 191,

195morbidity, 165mortality, 165

National Insurance Contributions, 179

negative income tax, 20Negative Utility, 72no difference, 21non-dictatorship, 139nudge, 106, 188numeraire, 65, 77

ordinal utility, 74overlapping generations, 40Oxera, 100

parade, 43persistence, 117Personal Carbon Allowances, 77,

164pollution trading, 51pool (electricity), 150, 209Portia, 24

Subject Index 261

precautionary principle, 100prepayment meter, 41present bias, 81Price Drift, 61pricing universe, 152primary poverty, 35Principle of Superposition, 158prior, 63prisoners’ dilemma, 156privacy, 153, 202probability neglect, 87problem of induction, 81projection bias, 81property rights, 8, 153Prospect Theory, 79psychic addition, 92Psychic Measurement, 106Public Goods, 51

QALY, 10, 77, 107–9, 174–5quanto, 60

range effects, 82Rational Expectations, 28rationing, 2, 116, 118, 185Redistribution of Wealth, 19, 190reflexivity, 75refrigerator, 145regulatory state paradigm, 10reliance damages, 23Renewable Electricity Guarantee of

Origin, 162Renewable Heat Incentive, 179Renewable Obligation Certificates,

162resilience events, 144restitution damage, 23rhythm of life, 146–7, 186rule utilitarianism, 17, 21

second best, 20, 101second theorem of welfare

economics, 120–1Sequencing Effects, 82Shylock, 24

smart system, 143Social Time Preference Rate, 59,

95–6space heating, 144spinning reserve, 148splining, 102starting point effects, 82statistical life, 14, 108statistical life year, 91, 108storage, 144sum-ranking, 12, 15super neutral, 76

taste, 40tâtonnement, 11Tea Party, 28teleological, 14, 17, 24theft, 52Threshold Priority, 72–3Threshold Utility, 172transitivity, 75triangulation, 151trigger points, 35trilemma, 1, 5–6

Universal Service, 176, 184unrestricted domain, 75, 139USE, 150

Value Added Tax, 176, 180–4Value of a Man, 108value of statistical life, 108veil of ignorance, 21VOLL, 209

warm homes and energy conservation act, 169

washing machine, 146Washington consensus, 24weak Pareto principle, 139windfall tax, 29, 195Winter Fuel Payments, 184wisdom of crowds, 53

Zero Carbon Home, 163