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Social discount rate: spaces for agreement

Author

Listed:
  • Takashi Hayashi

    (University of Glasgow)

  • Michele Lombardi

    (University of Liverpool
    DiSES, University of Napoli Federico II)

Abstract

We study the problem of aggregating discounted utility preferences into a social discounted utility preference model. We use an axiom capturing a social responsibility of individuals’ attitudes to time, called consensus Pareto. We show that this axiom can provide consistent foundations for welfare judgments. Moreover, in conjunction with the standard axioms of anonymity and continuity, consensus Pareto can help adjudicate some fundamental issues related to the choice of the social discount rate: the society selects the rate through a generalized median voter scheme.

Suggested Citation

  • Takashi Hayashi & Michele Lombardi, 2021. "Social discount rate: spaces for agreement," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(2), pages 247-257, October.
    • Handle: RePEc:spr:etbull:v:9:y:2021:i:2:d:10.1007_s40505-021-00209-9
    DOI: 10.1007/s40505-021-00209-9
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    References listed on IDEAS

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    Cited by:

    1. Christopher P. Chambers & Federico Echenique & Alan D. Miller, 2023. "Decreasing Impatience," American Economic Journal: Microeconomics, American Economic Association, vol. 15(3), pages 527-551, August.

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    More about this item

    Keywords

    Consensus Pareto; Social aggregation; Discounted utility model; Expected utility theory; Generalized median;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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