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Utilitarianism and unequal longevities: A remedy?

  • Leroux, Marie-Louise
  • Ponthiere, Gregory

In the context of unequal deterministic longevities, classical utilitarianism exhibits, under time-additive individual preferences, a counterintuitive tendency to redistribute resources from short-lived agents towards long-lived agents, against any intuition for compensation. We examine the robustness of that result to the introduction of risky lifetime, and to a broader class of individual preferences. It is shown that classical utilitarianism remains unable to provide, in that broader framework, a general redistribution towards the short-lived. Then, we propose a remedy, which consists in imputing, when solving the social planner's allocation problem, the consumption equivalent of a long life to the consumption of long-lived agents. This compensation-constrained utilitarianism is shown to reduce welfare inequalities across agents with unequal lifetimes.

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File URL: http://www.sciencedirect.com/science/article/pii/S0264999312003422
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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 30 (2013)
Issue (Month): C ()
Pages: 888-899

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Handle: RePEc:eee:ecmode:v:30:y:2013:i:c:p:888-899
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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  1. Marie-Louise Leroux & Pierre Pestieau & Gregory Ponthiere, 2011. "Optimal linear taxation under endogenous longevity," Journal of Population Economics, Springer, vol. 24(1), pages 213-237, January.
  2. repec:cup:cbooks:9780521681599 is not listed on IDEAS
  3. Winfried Pohlmeier & Luc Bauwens & David Veredas, 2007. "High frequency financial econometrics. Recent developments," ULB Institutional Repository 2013/136223, ULB -- Universite Libre de Bruxelles.
  4. Marie-Louise Leroux & Grégory Ponthière, 2008. "Optimal tax policy and expected longevity: A mean and variance utility approach," PSE Working Papers halshs-00586247, HAL.
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