Mathematical and Ethical Considerations in Economics Modelling

Abstract We consider the mathematical properties of economic models concerned with value maximisation, including integrated assessment models. We illustrate how the outcomes that result from maximising value subject to convergence to a steady state in the long run may be very different from the outcomes that arise from maximising value without requiring such convergence. We contend that many economic models include an assumption (sometimes hidden) that the economy converges to a steady state in the long run, so the outcome if such an assumption does not hold true may be very different from the model predictions. We reflect on the intergenerational injustice relating to this and other ethical and mathematical considerations in economic models, in the context of environmental and social issues. We hope to encourage improved communication and awareness of modelling assumptions, and a more fundamental rethink of economic models, values and policies, given the magnitude of the risks currently faced by humanity.