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Intergenerational Justice when Future Worlds Are Uncertain

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Author Info

  • Humberto Llavador

    (Universitat Pompeu Fabra)

  • John E. Roemer

    ()
    (Yale University)

  • Joaquim Silvestre

    (University of California, Davis)

Abstract

Suppose that there exists a positive (exogenous) probability that at each date of a possibly infinite future, the human species will disappear. We postulate an Ethical Observer (EO) who must solve an intertemporal welfare maximization problem under this kind of uncertainty, with preferences that satisfy the expected utility hypothesis. Various social welfare criteria are expressed as alternative von Neumann-Morgenstern utility functions for the EO: utilitarianism, Rawlsianism, and an extension of the latter that corrects for the size of population. Our analysis covers, first, a simple cake-eating economy, where the utilitarian and Rawlsian recommend the same intergenerational allocation. Second, we consider a productive economy with education and capital. There, however, the recommendations of the two Ethical Observers are in general (but not always) different. Surprisingly, when the utilitarian optimization program diverges, then it is optimal for the extended Rawlsian to ignore the uncertainty concerning the possible disappearance of the human species in the future. We conclude with some thoughts about what these results imply for the issue of intergenerational welfare maximization in the presence of global warming.

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Bibliographic Info

Paper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1692.

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Length: 48 pages
Date of creation: Apr 2009
Date of revision:
Publication status: Published in Journal of Mathematical Economics (2010) 46(5): 728-761
Handle: RePEc:cwl:cwldpp:1692

Note: CFP 1324.
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Related research

Keywords: Discounted utilitarianism; Rawlsian; Sustainability; Maximin; Uncertainty; Expected utility; von Neumann-Morgenstern; Dynamic welfare maximization;

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References

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  1. Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2008. "A Dynamic Analysis of Human Welfare in a Warming Planet," Working Papers 358, Barcelona Graduate School of Economics.
  2. Dasgupta, Partha, 1974. "On some alternative criteria for justice between generations," Journal of Public Economics, Elsevier, vol. 3(4), pages 405-423, November.
  3. Basu, Kaushik & Mitra, Tapan, 2003. "Utilitarianism for Infinite Utility Streams: A New Welfare Criterion and Its Axiomatic Characterization," Working Papers 03-05, Cornell University, Center for Analytic Economics.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. What intertemporal policy objective to take?
    by Economic Logician in Economic Logic on 2009-12-09 04:04:00
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Cited by:
  1. Michele Lombardi & Roberto Veneziani, 2009. "Liberal Egalitarianism and the Harm Principle," Working Papers 649, Queen Mary, University of London, School of Economics and Finance.
  2. Wolf, Stephan, 2010. "An intergenerational social contract for common resource usage: A reality-check for Harsanyi and Rawls," The Constitutional Economics Network Working Papers 02-2010, University of Freiburg, Department of Economic Policy and Constitutional Economic Theory.
  3. Humberto Llavador & John E. Roemer & Joaquim Silvestre & Joaquim Silvestre, 2009. "A Dynamic Analysis Of Human Welfare In A Warming Planet”," Working Papers 95, University of California, Davis, Department of Economics.
  4. Wojciech Rybicki, 2012. "Discounting and ideas of intergenerational equity and sustainability," Operations Research and Decisions, Wroclaw University of Technology, Institute of Organization and Management, vol. 1, pages 63-84.
  5. Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2012. "Should we sustain? And if so, sustain what? Consumption or the quality of life?," Working Papers 1222, University of California, Davis, Department of Economics.

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