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Sustainability and discounted utilitarianism in models of economic growth

  • Asheim, Geir B.
  • Mitra, Tapan

Discounted utilitarianism treats generations unequally and leads to seemingly unappealing consequences in some models of economic growth. Instead, this paper presents and applies sustainable discounted utilitarianism (SDU). SDU respects the interests of future generations and resolves intergenerational conflicts by imposing on discounted utilitarianism that the evaluation be insensitive to the interests of the present generation if the present is better off than the future. An SDU social welfare function always exists. We provide a convenient sufficient condition to identify SDU optima and apply SDU to two well-known models of economic growth.

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Article provided by Elsevier in its journal Mathematical Social Sciences.

Volume (Year): 59 (2010)
Issue (Month): 2 (March)
Pages: 148-169

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Handle: RePEc:eee:matsoc:v:59:y:2010:i:2:p:148-169
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505565

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  1. Cass, D & Yaari, M E, 1971. "Present Values Playing the Role of Efficiency Prices in the One-Good Growth Model," Review of Economic Studies, Wiley Blackwell, vol. 38(115), pages 331-39, July.
  2. Asheim, Geir B, 1988. "Rawlsian Intergenerational Justice as a Markov-Perfect Equilibrium in a Resource Technology," Review of Economic Studies, Wiley Blackwell, vol. 55(3), pages 469-83, July.
  3. Kaushik Basu & Tapan Mitra, 2003. "Aggregating Infinite Utility Streams with InterGenerational Equity: The Impossibility of Being Paretian," Econometrica, Econometric Society, vol. 71(5), pages 1557-1563, 09.
  4. Asheim, Geir B. & Mitra, Tapan & Tungodden, Bertil, 2006. "Sustainable recursive social welfare functions," Memorandum 18/2006, Oslo University, Department of Economics.
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  6. Graciela Chichilnisky, 1996. "An axiomatic approach to sustainable development," Social Choice and Welfare, Springer, vol. 13(2), pages 231-257, April.
  7. Asheim, Geir B. & Tungodden, Bertil, 2005. "A new equity condition for infinite utility streams and the possibility of being Paretian," Memorandum 08/2005, Oslo University, Department of Economics.
  8. Cass, David & Mitra, Tapan, 1991. "Indefinitely Sustained Consumption Despite Exhaustible Natural Resources," Economic Theory, Springer, vol. 1(2), pages 119-46, April.
  9. Heal, G., 1998. "Valuing the Future: Economic Theory and Sustainability," Papers 98-10, Columbia - Graduate School of Business.
  10. Asheim, Geir B. & Buchholz, Wolfgang & Tungodden, Bertil, 2001. "Justifying Sustainability," Journal of Environmental Economics and Management, Elsevier, vol. 41(3), pages 252-268, May.
  11. Tjalling C. Koopmans, 1959. "Stationary Ordinal Utility and Impatience," Cowles Foundation Discussion Papers 81, Cowles Foundation for Research in Economics, Yale University.
  12. Richard Beals & Tjalling C. Koopmans, 1967. "Maximizing Stationary Utility in a Constant Technology," Cowles Foundation Discussion Papers 229, Cowles Foundation for Research in Economics, Yale University.
  13. Epstein, Larry G., 1986. "Intergenerational consumption rules: An axiomatization of utilitarianism and egalitarianism," Journal of Economic Theory, Elsevier, vol. 38(2), pages 280-297, April.
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  16. Banerjee, Kuntal, 2006. "On the equity-efficiency trade off in aggregating infinite utility streams," Economics Letters, Elsevier, vol. 93(1), pages 63-67, October.
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