Advanced Search
MyIDEAS: Login to save this paper or follow this series

Justifying Social Discounting: The Rank-Discounted Utilitarian Approach

Contents:

Author Info

  • Stéphane Zuber
  • Geir B. Asheim

Abstract

The discounted utilitarian criterion for infinite horizon social choice has been criticized for treating generations unequally. We propose an extended rank-discounted utilitarian (ERDU) criterion instead. The criterion amounts to discounted utilitarianism on non-decreasing streams, but it treats all generations impartially: discounting becomes the mere expression of intergenerational inequality aversion. We show that more inequality averse ERDU societies have higher social discount rates when future generations are better-off. We apply the ERDU approach in two benchmark economic growth models and prove that it promotes sustainable policies that maximize discounted utilitarian welfare.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2010/wp-cesifo-2010-09/cesifo1_wp3192.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3192.

as in new window
Length:
Date of creation: 2010
Date of revision:
Handle: RePEc:ces:ceswps:_3192

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords: intergenerational equity; social discounting; discounted utilitarianism; sustainability;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Geir B. Asheim & Wolfgang Buchholz, 2003. "The Malleability of Undiscounted Utilitarianism as a Criterion of Intergenerational Justice," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 70(279), pages 405-422, 08.
  2. Simon Grant & John Quiggin, 2004. "Increasing Uncertainty: A Definition," Risk & Uncertainty Working Papers, Risk and Sustainable Management Group, University of Queensland WPR04_4, Risk and Sustainable Management Group, University of Queensland.
  3. Chateauneuf, A. & Cohen, M. & Meilijson, I., 1997. "More Pessimism than Greediness: A Characterization of Monotone Risk Aversion in the Rank-Dependant Expected Utility Model," Papiers d'Economie Mathématique et Applications, Université Panthéon-Sorbonne (Paris 1) 97.53, Université Panthéon-Sorbonne (Paris 1).
  4. Geir B. Asheim & Tapan Mitra, 2009. "Sustainability and Discounted Utilitarianism in Models of Economic Growth," CESifo Working Paper Series 2521, CESifo Group Munich.
  5. David Schmeidler, 1989. "Subjective Probability and Expected Utility without Additivity," Levine's Working Paper Archive 7662, David K. Levine.
  6. Asheim,G.B. & Buchholz,W. & Tungodden,B., 1999. "Justifying sustainability," Memorandum, Oslo University, Department of Economics 08/1999, Oslo University, Department of Economics.
  7. Chiaki Hara & Tomoichi Shinotsuka & Kotaro Suzumura & Yongsheng Xu, 2008. "Continuity and egalitarianism in the evaluation of infinite utility streams," Social Choice and Welfare, Springer, Springer, vol. 31(2), pages 179-191, August.
  8. Cass, David, 1990. "Indefinitely sustained consumption despite exhaustible natural resources," CEPREMAP Working Papers (Couverture Orange) 9027, CEPREMAP.
  9. Partha Dasgupta, 2008. "Discounting climate change," Journal of Risk and Uncertainty, Springer, Springer, vol. 37(2), pages 141-169, December.
  10. Kaushik Basu & Tapan Mitra, 2003. "Aggregating Infinite Utility Streams with InterGenerational Equity: The Impossibility of Being Paretian," Econometrica, Econometric Society, Econometric Society, vol. 71(5), pages 1557-1563, 09.
  11. Graciela Chichilnisky, 1996. "An axiomatic approach to sustainable development," Social Choice and Welfare, Springer, Springer, vol. 13(2), pages 231-257, April.
  12. FLEURBAEY, Marc & MICHEL, Philippe, 1997. "Intertemporal equity and the extension of the Ramsey criterion," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1997004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, Econometric Society, vol. 55(1), pages 95-115, January.
  14. WEYMARK, John A., . "Generalized Gini inequality indices," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -453, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. Donaldson, David & Weymark, John A., 1983. "Ethically flexible gini indices for income distributions in the continuum," Journal of Economic Theory, Elsevier, Elsevier, vol. 29(2), pages 353-358, April.
  16. Zame, William R., 2007. "Can intergenerational equity be operationalized?," Theoretical Economics, Econometric Society, Econometric Society, vol. 2(2), June.
  17. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 45(3), pages 686-702, September.
  18. Dasgupta, Swapan & Mitra, Tapan, 1983. "Intergenerational Equity and Efficient Allocation of Exhaustible Resources," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 133-53, February.
  19. Svensson, Lars-Gunnar, 1980. "Equity among Generations," Econometrica, Econometric Society, Econometric Society, vol. 48(5), pages 1251-56, July.
  20. Bossert, Walter, 1990. "An axiomatization of the single-series Ginis," Journal of Economic Theory, Elsevier, Elsevier, vol. 50(1), pages 82-92, February.
  21. Martin L. Weitzman, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 45(3), pages 703-724, September.
  22. Wakker, Peter, 1993. "Additive representations on rank-ordered sets : II. The topological approach," Journal of Mathematical Economics, Elsevier, vol. 22(1), pages 1-26.
  23. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, Elsevier, vol. 22(1), pages 67-86, February.
  24. Asheim, Geir B., 1991. "Unjust intergenerational allocations," Journal of Economic Theory, Elsevier, Elsevier, vol. 54(2), pages 350-371, August.
  25. Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 3(4), pages 323-343, December.
  26. Geir B. Asheim, 2010. "Intergenerational Equity," Annual Review of Economics, Annual Reviews, Annual Reviews, vol. 2(1), pages 197-222, 09.
  27. Birchenhall, C. R. & Grout, P., 1979. "On equal plans with an infinite horizon," Journal of Economic Theory, Elsevier, Elsevier, vol. 21(2), pages 249-264, October.
  28. repec:hal:journl:halshs-00211906 is not listed on IDEAS
  29. Luc LAUWERS, 2009. "Ordering infinite utility streams comes at the cost of a non-Ramsey set," Center for Economic Studies - Discussion papers, Katholieke Universiteit Leuven, Centrum voor Economische Studiën ces09.05, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  30. Rebille, Yann, 2007. "Patience in some non-additive models," Journal of Mathematical Economics, Elsevier, vol. 43(6), pages 749-763, August.
  31. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, Elsevier, vol. 2(3), pages 244-263, September.
  32. Gilboa, Itzhak, 1987. "Expected utility with purely subjective non-additive probabilities," Journal of Mathematical Economics, Elsevier, vol. 16(1), pages 65-88, February.
  33. Bossert, Walter & Sprumont, Yves & Suzumura, Kotaro, 2007. "Ordering infinite utility streams," Journal of Economic Theory, Elsevier, Elsevier, vol. 135(1), pages 579-589, July.
  34. Van Liedekerke, Luc & Lauwers, Luc, 1997. "Sacrificing the Patrol: Utilitarianism, Future Generations and Infinity," Economics and Philosophy, Cambridge University Press, Cambridge University Press, vol. 13(02), pages 159-174, October.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3192. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.