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A Mixed Bentham-Rawls Criterion for Intergenerational Equity : Theory and Implications

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  • ALVAREZ-CUADRADO, Francisco
  • LONG, Ngo Van

Abstract

Ranking development programs using integrals of discounted utilities can yield drastic consequences that offend our sense of justice. New alternative social welfare criteria should be considered. A reaction to discounted utilitarianism is to moderate its effects by adding to the social welfare function a second term that takes seriously the welfare of the generations that live in the far distant future. Chichilnisky proposes a social welfare function that has two desirable properties: (i) non-dictatorship of the present, and (ii) non-dictatorship of the future. However, in many economic models, there exists no optimal path under the Chichilnisky criterion. We introduce a third desideratum: “non-dictatorship of the least advantaged,” and propose a new welfare criterion that is morally compelling. It is a weighted average of two terms: (a) the sum of discounted utilities, and (b) the utility level of the least advantaged generation. We derive necessary conditions to characterize growth paths that satisfy our criterion, and show that in some models with familiar dynamic specifications, an optimal path exists and displays appealing characteristics.

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Bibliographic Info

Paper provided by Centre interuniversitaire de recherche en économie quantitative, CIREQ in its series Cahiers de recherche with number 06-2007.

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Length: 41 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:mtl:montec:06-2007

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Keywords: Intergenerational equity; maximin; sustainable development;

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References

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  1. John Hartwick, 1976. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," Working Papers 220, Queen's University, Department of Economics.
  2. Kirk Hamilton & Cees Withagen, 2007. "Savings growth and the path of utility," Canadian Journal of Economics, Canadian Economics Association, vol. 40(2), pages 703-713, May.
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  6. Charles Figuières & Mabel Tidball, 2006. "Sustainable exploitation of a natural resource: a satisfying use of Chichilnisky's criterion," Working Papers 06-03, LAMETA, Universtiy of Montpellier, revised Sep 2006.
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Citations

RePEc Biblio mentions

As found on the RePEc Biblio, the curated bibliography for Economics:
  1. > Environmental and Natural Resource Economics > Climate economics > Discounting, equity, uncertainty
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Cited by:
  1. Ngo Van Long & Vincent Martinet, 2012. "Combining Rights and Welfarism: A New Approach to Intertemporal Evaluation of Social Alternatives," CESifo Working Paper Series 3746, CESifo Group Munich.
  2. Bazhanov, Andrei, 2006. "Decreasing of Oil Extraction: Consumption behavior along transition paths," MPRA Paper 469, University Library of Munich, Germany.
  3. Charles Figuières & Mabel Tidball, 2006. "Sustainable exploitation of a natural resource: a satisfying use of Chichilnisky's criterion," Working Papers 06-03, LAMETA, Universtiy of Montpellier, revised Sep 2006.
  4. Bazhanov, Andrei V., 2013. "Constant-utility paths in a resource-based economy," Resource and Energy Economics, Elsevier, vol. 35(3), pages 342-355.
  5. Luc LAUWERS, 2010. "Intergenerational equity, efficiency and constructability," Center for Economic Studies - Discussion papers ces10.22, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  6. repec:ipg:wpaper:2 is not listed on IDEAS
  7. Richard S.J. Tol, 2012. "Climate Policy with Bentham-Rawls Preferences," Working Paper Series 3812, Department of Economics, University of Sussex.
  8. Martinet, Vincent, 2011. "A characterization of sustainability with indicators," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 183-197, March.
  9. Charles Figuières & Hervé Guyomard & Gilles Rotillon, 2010. "Sustainable Development: Between Moral Injunctions and Natural Constraints," Sustainability, MDPI, Open Access Journal, vol. 2(11), pages 3608-3622, November.
  10. Tol, Richard S.J., 2013. "Targets for global climate policy: An overview," Journal of Economic Dynamics and Control, Elsevier, vol. 37(5), pages 911-928.
  11. Michielsen, T.O., 2013. "Environmental Catastrophes Under Time-inconsistent Preferences," Discussion Paper 2013-013, Tilburg University, Center for Economic Research.
  12. Charles Figuières & Ngo Van Long & Mabel Tidball, 2013. "The MBR Intertemporal Choice Criterion and Rawls' Just Savings Principle," Working Papers 13-02, LAMETA, Universtiy of Montpellier, revised Feb 2013.
  13. Thomas Michielsen, 2013. "Environmental Catastrophes under Time-Inconsistent Preferences," Working Papers 2013.55, Fondazione Eni Enrico Mattei.
  14. Alain Ayong Le Kama & Thai Ha-Huy & Coung Le Van & Katheline Schubert, 2013. "A Never-decisive and Anonymous Criterion for Optimal Growth Models," Working Papers 2013-002, Department of Research, Ipag Business School.
  15. Robert D. Cairns, 2011. "Accounting for Sustainability: A Dissenting Opinion," Sustainability, MDPI, Open Access Journal, vol. 3(9), pages 1341-1356, August.
  16. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," Dynamic Games and Applications, Springer, vol. 1(1), pages 115-148, March.

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