Conceptual winsorizing: An application to the social cost of carbon

Richard S. J. Tol

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arXiv · 2508.07384

Conceptual winsorizing: An application to the social cost of carbon

Richard S. J. Tol

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Abstract

There are many published estimates of the social cost of carbon. Some are clear outliers, the result of poorly constrained models. Percentile winsorizing is an option, but I here propose conceptual winsorizing: The social cost of carbon is either a willingness to pay, which cannot exceed the ability to pay, or a proposed carbon tax, which cannot raise more revenue than all other taxes combined. Conceptual winsorizing successfully removes high outliers. It slackens as economies decarbonize, slowly without climate policy, faster with.

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Richard S. J. Tol. 2025-08-10. Conceptual winsorizing: An application to the social cost of carbon. https://arxiv.org/abs/2508.07384

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