Policy Note for IIASA - Alpbach Group Wolfgang Lutz

All policies aimed at improving human well-being need to be aware of the fact that there is inequality/heterogeneity within human populations. This population heterogeneity can be partly captured in terms of relevant observable characteristics such as age, gender, and level of education. But there always remains some hidden heterogeneity. While it seems to be trivial knowledge that not all people are the same in terms of their behaviors and their vulnerabilities, most economic, technological and environmental models make the (over)simplifying assumption of complete homogeneity of human populations. This homogeneity assumption is often unnecessary – because data on the heterogeneous nature of populations exist – and can be grossly misleading in the resulting conclusions and policy advice.