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Intergenerational justice when future worlds are uncertain

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  • Humberto Llavador

    ()

  • John E. Roemer
  • Joaquim Silvestre

Abstract

Let there be a positive (exogenous) probability that, at each date, the human species will disappear. We postulate an Ethical Observer (EO) who maximizes intertemporal welfare under this uncertainty, with expected-utility preferences. Various social welfare criteria entail alternative von Neumann- Morgenstern utility functions for the EO: utilitarian, Rawlsian, and an extension of the latter that corrects for the size of population. Our analysis covers, first, a cake-eating economy (without production), where the utilitarian and Rawlsian recommend the same allocation. Second, a productive economy with education and capital, where it turns out that the recommendations of the two EOs are in general different. But when the utilitarian program diverges, then we prove it is optimal for the extended Rawlsian to ignore the uncertainty concerning the possible disappearance of the human species in the future. We conclude by discussing the implications for intergenerational welfare maximization in the presence of global warming.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1178.

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Date of creation: Oct 2009
Date of revision: Jun 2010
Handle: RePEc:upf:upfgen:1178

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Web page: http://www.econ.upf.edu/

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. Basu, Kaushik & Mitra, Tapan, 2007. "Utilitarianism for infinite utility streams: A new welfare criterion and its axiomatic characterization," Journal of Economic Theory, Elsevier, vol. 133(1), pages 350-373, March.
  2. Llavador, Humberto & Roemer, John E. & Silvestre, Joaquim, 2011. "“A dynamic analysis of human welfare in a warming planet”," Journal of Public Economics, Elsevier, vol. 95(11), pages 1607-1620.
  3. Dasgupta, Partha, 1974. "On some alternative criteria for justice between generations," Journal of Public Economics, Elsevier, vol. 3(4), pages 405-423, November.
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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 & Kahame Miyagishima & Roberto Veneziani, 2013. "Liberal Egalitarianism and the Harm Principle," UMASS Amherst Economics Working Papers 2013-07, University of Massachusetts Amherst, Department of Economics.
  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. Llavador, Humberto & Roemer, John E. & Silvestre, Joaquim, 2011. "“A dynamic analysis of human welfare in a warming planet”," Journal of Public Economics, Elsevier, vol. 95(11), pages 1607-1620.
  4. 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.
  5. 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.

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