The Social Discount Rate
AbstractIn welfare theory it is standard to pick the consumption stream that maximizes the welfare of the representative agent. We argue against this position, and show that a benevolent social planner will generally place a greater weight on future consumption than does the representative agent. Our analysis has immediate implications for public policy: agents discount the future too much and the government should promote future oriented policies.
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Date of creation: Oct 2000
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Other versions of this item:
- Andrew Caplin & John Leahy, 2001. "The social discount rate," Discussion Paper / Institute for Empirical Macroeconomics 137, Federal Reserve Bank of Minneapolis.
- D60 - Microeconomics - - Welfare Economics - - - General
- D90 - Microeconomics - - Intertemporal Choice - - - General
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