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Discounting by committee

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  • Millner, Antony
  • Heal, Geoffrey

Abstract

We study a dynamic social choice problem in which a sequence of committees must decide how to consume a public asset. A committee convened at time t decides on consumption at t, accounting for the behaviour of future committees. Committee members disagree about the appropriate value of the pure rate of time preference, but must nevertheless reach a decision. If each committee aggregates its members' preferences in a utilitarian manner, the collective preferences of successive committees will be time inconsistent, and they will implement inefficient consumption plans. If however committees decide on the level of consumption by a majoritarian vote in each period, they may improve on the consumption plans implemented by utilitarian committees. Using a simple model, we show that this occurs in empirically plausible cases. Application to the problem of choosing the social discount rate is discussed.

Suggested Citation

  • Millner, Antony & Heal, Geoffrey, 2018. "Discounting by committee," Journal of Public Economics, Elsevier, vol. 167(C), pages 91-104.
    • Handle: RePEc:eee:pubeco:v:167:y:2018:i:c:p:91-104
    DOI: 10.1016/j.jpubeco.2018.09.005
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    Cited by:

    1. Rick Van der Ploeg, 2020. "Discounting And Climate Policy," OxCarre Working Papers 244, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    2. Peter Harrison Howard & Derek Sylvan, 2020. "Wisdom of the experts: Using survey responses to address positive and normative uncertainties in climate-economic models," Climatic Change, Springer, vol. 162(2), pages 213-232, September.
    3. Graeme Guthrie, 2021. "Discounting, Disagreement, and the Option to Delay," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(1), pages 95-133, September.
    4. Lemoine, Derek, 2018. "Age-induced acceleration of time: Implications for intertemporal choice," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 143-152.
    5. Niko Jaakkola & Antony Millner, 2022. "Nondogmatic Climate Policy," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 9(4), pages 807-841.

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    More about this item

    Keywords

    Collective decisions; Intertemporal choice; Time inconsistency; Social discounting;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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