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Utilitarianism and unequal longevities: A remedy?

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  • Leroux, Marie-Louise
  • Ponthiere, Gregory

Abstract

In the context of unequal deterministic longevities, classical utilitarianism exhibits, under time-additive individual preferences, a counterintuitive tendency to redistribute resources from short-lived agents towards long-lived agents, against any intuition for compensation. We examine the robustness of that result to the introduction of risky lifetime, and to a broader class of individual preferences. It is shown that classical utilitarianism remains unable to provide, in that broader framework, a general redistribution towards the short-lived. Then, we propose a remedy, which consists in imputing, when solving the social planner's allocation problem, the consumption equivalent of a long life to the consumption of long-lived agents. This compensation-constrained utilitarianism is shown to reduce welfare inequalities across agents with unequal lifetimes.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 30 (2013)
Issue (Month): C ()
Pages: 888-899

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Handle: RePEc:eee:ecmode:v:30:y:2013:i:c:p:888-899

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Utilitarianism; Differential longevity; Compensation; Redistribution; Consumption equivalent;

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References

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  1. LEROUX, Marie-Louise & PESTIEAU, Pierre & PONTHIERE, Grégory, . "Optimal linear taxation under endogenous longevity," CORE Discussion Papers RP -2268, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. LEROUX, Marie-Louise & PONTHIERE, Grégory, 2008. "Optimal tax policy and expected longevity: a mean and variance approach," CORE Discussion Papers 2008039, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Marie-Louise Leroux & Gregory Ponthiere, 2009. "Optimal tax policy and expected longevity: a mean and variance utility approach," International Tax and Public Finance, Springer, vol. 16(4), pages 514-537, August.
  4. Belleflamme,Paul & Peitz,Martin, 2010. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9780521681599, October.
  5. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthiere, 2009. "Should we Subsidize Longevity?," CESifo Working Paper Series 2614, CESifo Group Munich.
  6. repec:pse:psecon:2008-46 is not listed on IDEAS
  7. Winfried Pohlmeier & Luc Bauwens & David Veredas, 2007. "High frequency financial econometrics. Recent developments," ULB Institutional Repository 2013/136223, ULB -- Universite Libre de Bruxelles.
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Cited by:
  1. repec:hal:wpaper:halshs-00676492 is not listed on IDEAS
  2. Pierre Pestieau & Grégory Ponthière, 2012. "The public economics of increasing longevity," PSE Working Papers halshs-00676492, HAL.
  3. repec:hal:wpaper:halshs-00564934 is not listed on IDEAS

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