The Social Discount Rate Under Majority Voting
AbstractIf each voter is a price taker who consumes a bundle of goods such that his marginal rate of substitution equals the relative prices of goods in different periods, all consumers will have the same marginal rate of time preference. This seems to suggest that voters will unanimously agree on the social discount rate. Such reasoning ignores, however, the effects of different investment policies on the relative prices of goods in different periods. A consideration of this effect shows that a majority of voters may prefer a social discount rate that allows the adoption of inefficient investments.
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Bibliographic InfoPaper provided by California Irvine - School of Social Sciences in its series Papers with number 88-03.
Length: 13 pages
Date of creation: 1988
Date of revision:
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Postal: UNIVERSITY OF CALIFORNIA IRVINE, SCHOOL OF SOCIAL SCIENCES, IRVINECALIFORNIA 91717 U.S.A.
banks ; discount ; voting ; interest rate;
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- Glazer, Amihai & Kanniainen, Vesa & Niskanen, Esko, 2003.
"Bequests, control rights, and cost-benefit analysis,"
European Journal of Political Economy,
Elsevier, vol. 19(1), pages 71-82, March.
- Amihai Glazer & Vesa Kanniainen & Esko Niskanen, 2001. "Bequests, Control Rights, and Cost-Benefit Analysis," CESifo Working Paper Series 576, CESifo Group Munich.
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