Klaus Hasselmann and Economics

Abstract

Klaus Hasselmann has earned the 2021 Nobel Prize in physics for his breakthroughs in analysing the climate system as a complex physical system. Since decades, as a leading climate scientist he is aware of the need for creative cooperation between climate scientists and researchers from other fields, especially economics. To facilitate such cooperation, he has designed a productive research program for economic analysis in view of climate change. Without blurring the differences between economics and physics, the Hasselmann program stresses the complexities of today’s economy. This includes the importance of heterogeneous actors and different time scales, of making major uncertainties explicit and bringing researchers and practitioners in close interaction. The program has triggered decades of collaborative research, especially in the network of the Global Climate Forum, that he has founded for this purpose. Research inspired by Hasselmann’s innovative ideas has led to a farewell to outdated economic approaches: single-equilibrium models, a single constant discount rate, framing the climate challenge as a kind of prisoner’s dilemma and framing it as a problem of scarcity requiring sacrifices from the majority of today’s population. Instead of presenting the climate problem as the ultimate apocalyptic narrative, he sees it as a challenge to be mastered. To meet this challenge requires careful research in order to identify underutilisation of human, technical and social capacities that offer the keys to a climate friendly world economy. Climate neutrality may then be achieved by activating these capacities through investment-oriented climate strategies, designed and implemented by different actors both in industrialised and developing countries. The difficulties to bring global greenhouse gas emissions down to net zero are enormous; the Hasselmann program holds promise of significant advances in this endeavour.