Collegium Institute's Philosophy of Finance Fellowship is a series of seminars that draw together Penn students to explore the work of both scholars and practitioners and address the fundamental questions raised by the practice of finance, focusing on a different theme each academic year. You can find more information about the Fall 2021 Fellowship below, and about the Philosophy of Finance initiative more generally here.
Fall 2021 Philosophy of Finance Fellowship: Markets and the Environment
Can free markets solve environmental problems, or do they only cause them? How can property rights and the profit motive be used to address climate change? Does impact investing have a positive effect on the environment? For this academic year, the Philosophy of Finance Fellowship will be looking at these questions in an attempt to understand if finance and markets can be part of the solution to the problem of climate change.
We will look at three types of markets. In the Fall semester, we will examine markets made by government regulation, such as the one in emissions credits, as well as the public stock markets. In the Spring, we will examine public markets again, and then turn to private markets, especially cleantech venture capital, to see if innovation and the profit motive can be used effectively to decarbonize the atmosphere. In the Fall, we will cover some theoretical background and then examine emissions pricing, property rights, the profit motive, and impact investing. We conclude the Fall term with a look at an Austrian perspective on environmental economics, which touches on the major themes of the semester.
The discussions will be facilitated by Dr. Michael T. Kane, program director. Dr. Kane is both an historian of philosophy and a professional investor, having founded and managed Kestrel Investments for over 15 years. Dr. Kane is also a lecturer in Penn's Economics Department.
Schedule and Readings
The seminar will meet in person over the course of 5 Fridays during the Fall, from 12pm-1pm in Houston Hall Bishop White Room (217). Lunch will be provided. Readings will be made available on this page.
9/10 Key concepts in economics of the environment: Sustainability, Externalities, Social Cost, Bargaining, and Property Rights
Robert Solow: “Sustainability: An Economist’s Perspective”
Arthur Pigou: short excerpt from Chapter IX of Economics of Welfare, “Divergences Between Marginal Social Net Product and Marginal Private Net Product”
Ronald Coase: excerpt from “The Problem of Social Cost”
10/1 Property rights, carbon pricing, and the Clean Air Act
Richard Schmalensee & Robert Stevins: “Policy Evolution Under the Clean Air Act”
William Nordhaus, chapters 19-20 from The Climate Casino, “The Central Role of Carbon Prices” and “Climate Change Policies at the National Level”
10/22 Using the profit motive to solve environmental problems
Rick Fedrizzi, “Can the Profit Motive Save Environmentalism?”
Masad Movahed, “Does Capitalism Have to be Bad for the Environment?”
11/12 ESG/Impact Investing
Guest speaker: Christina Alfonso-Ercan
Hauke Hillebrandt and John Halstead, “Donating Effectively is usually better than Impact Investing” (in part)
Julian F. Kölbel et al., “Can Sustainable Investing Save the World?” (in part)
12/3 Environmental Economics from an Austrian perspective