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Should government be risk-neutral?

Crawford School of Public Policy

Event details

Seminar

Date & time

Monday 14 April 2014
3.30pm–5.00pm

Venue

Barton Theatre, Level 1, JG Crawford Building 132, Lennox Crossing, ANU

Speaker

Allan Randall, Professor of Agricultural and Resource Economics, The University of Sydney.

Contacts

Sung Lee
6125 4387

The idea that government should seek to maximise expected value has currency in many risky contexts: as an investor, as a regulator of risky innovations and in climate policy.

In this talk, Allan Randall will report on work in progress examining the virtues of risk-neutral government.

Professor Randall defines risk as chance of harm and will discuss learning opportunities in the contexts of pre-release testing for risky innovations and adaptive management for threats emerging from business as usual. He will then turn to ambiguity, which has been defined by some as classical uncertainty but by others in ways that more nearly approach gross ignorance. The usual result in the literature is that ambiguity induces more cautious decision-making. Two recent claims – learning opportunities should induce riskier decision making and, given learning opportunities, ambiguous risks should be preferred to well-established risks of similar magnitude– will be examined with simple models.
Professor Randall will conclude with a more explicit and broad-ranging critique of risk-neutrality in regulation of pharmaceutical products and medical treatments.

Alan Randall is a Professor of Economics at the University of Sydney, and also the President of the Australian Agricultural and Resource Economic Society (AARES). Professor Randall’s research interests include environmental risk; biodiversity, habitat, and environmental sustainability; environmental regulation, monitoring, and enforcement; and the benefits and costs of environmental projects and programs. He was Head of the department of Agricultural and Resource Economics at the University of Sydney 2011-2013, and Chair of the department of Agricultural, Environmental, and Development Economics at Ohio State University 1998-2010.

Professor Robert Costanza, Chair in Public Policy, Crawford School of Public Policy, ANU will chair the seminar.

This seminar is presented by the Sustainability Solutions Centre at Crawford School of Public Policy, The Australian National University.

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