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Should we discount future generations’ welfare? A survey on the “pure” discount rate debate

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Grégory Ponthière

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Abstract

In A Mathematical Theory of Saving (1928), Frank Ramsey not only laid the foundations of the fruitful optimal growth literature, but also launched a major moral debate: should we discount future generations’ well-being? While Ramsey regarded such “pure” discounting as “ethically indefensible”, several philosophers and economists have developed arguments justifying the “pure” discounting practice since the early 1960s. This essay consists of a survey of those arguments. After a brief examination of the – often implicit – treatment of future generations’ welfare by utilitarian thinkers before Ramsey’s view was expressed, later arguments of various kinds are analysed. It is argued that, under the assumption of perfect certainty regarding future human life, the “pure” discounting practice seems ethically untenable. However, once we account for the uncertainty regarding future generations’ existence, “pure” discounting seems more acceptable, even if strong criticisms still remain, especially regarding the adequateness of the expected utility theory in such a normative context. those limits would be faced by any other consequences-based ethical theory in front of Different Number Choices.

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Paper provided by Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège in its series CREPP Working Papers with number 0302.

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Date of creation: 2003
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Handle: RePEc:rpp:wpaper:0302

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  1. John C. Harsanyi, 1953. "Cardinal Utility in Welfare Economics and in the Theory of Risk-taking," Journal of Political Economy, University of Chicago Press, vol. 61, pages 434. [Downloadable!] (restricted)
  2. Weymark, J.A., 1990. "A Reconsideration Of The Harsanyi-Sen Debate On Utilitarianism," UBC Departmental Archives 90-03, UBC Department of Economics.
  3. Blackorby, Charles & Bossert, Walter & Donaldson, David, 1995. "Intertemporal Population Ethics: Critical-Level Utilitarian Principles," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH.
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  4. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207. [Downloadable!] (restricted)
  5. Heal, G., 1998. "Valuing the Future: Economic Theory and Sustainability," Papers 98-10, Columbia - Graduate School of Business.
  6. Tjalling C. Koopmans, 1966. "Structure of Preference over Time," Cowles Foundation Discussion Papers 206R, Cowles Foundation, Yale University. [Downloadable!]
  7. Tjalling C. Koopmans, 1967. "Intertemporal Distribution and 'Optimal' Aggregate Economic Growth," Cowles Foundation Discussion Papers 228, Cowles Foundation, Yale University. [Downloadable!]
  8. Loewenstein, George & Prelec, Drazen, 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 573-97, May. [Downloadable!] (restricted)
  9. Tjalling C. Koopmans, 1959. "Stationary Ordinal Utility and Impatience," Cowles Foundation Discussion Papers 81, Cowles Foundation, Yale University. [Downloadable!]
  10. John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63, pages 309. [Downloadable!] (restricted)
  11. M. Fleurbaey & P. Michel, 1997. "Intertemporal equity and the extension of the Ramsey criterion," THEMA Working Papers 97-11, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
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  12. Tjalling C. Koopmans, 1966. "Objectives, Constraints and Outcomes in Optimal Growth Models," Cowles Foundation Discussion Papers 212, Cowles Foundation, Yale University. [Downloadable!]
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