Grantham Workshop | Roger Fouquet “The welfare effects of technological revolutions”
Roger Fouquet, Associate Professorial Research Fellow at the Grantham Research Institute on Climate Change and the Environment, will be the speaker for this seminar. The title of Roger’s presentation is ‘The Welfare Effects of Technological Revolutions’ and an abstract can be seen below.
Revolutions in consumer technology have led to major advancements in human wellbeing. They can also have major negative environmental impacts. This paper provides an exploratory historical cost-benefit analysis of technological revolutions. In order to do so, this paper addresses two challenges of estimating welfare benefits from technological change: first, by analysing the demand for services provided rather than the goods consumed, the incumbent and new technologies are comparable; and, second, by using historical data about willingness to pay for marginal levels of service consumption, it becomes possible to locate the demand curve and, therefore, quantify the consumer surplus. These estimates are compared with the negative external costs of these services. The paper confirms that there were dramatic increases in consumer surplus, which heavily outweighed the environmental costs and reflected the transformations in economies, societies and lifestyles that mobility and illumination provided in the nineteenth and early twentieth century. The evidence also shows that not all technological innovations increased consumer surplus relative to income. However, some of these innovations helped to reduce the substantial environmental damage and, therefore, indirectly added to social welfare. Finally, by projecting forward the trends in income and price elasticities, this method offers a way of considering the value of future technologies to consumers, which may help to direct current R&D investment.