Intergenerational Justice when Future Worlds Are Uncertain
Suppose that there exists a positive (exogenous) probability that at each date of a possibly infinite future, the human species will disappear. We postulate an Ethical Observer (EO) who must solve an intertemporal welfare maximization problem under this kind of uncertainty, with preferences that satisfy the expected utility hypothesis. Various social welfare criteria are expressed as alternative von Neumann-Morgenstern utility functions for the EO: utilitarianism, Rawlsianism, and an extension of the latter that corrects for the size of population. Our analysis covers, first, a simple cake-eating economy, where the utilitarian and Rawlsian recommend the same intergenerational allocation. Second, we consider a productive economy with education and capital. There, however, the recommendations of the two Ethical Observers are in general (but not always) different. Surprisingly, when the utilitarian optimization program diverges, then it is optimal for the extended Rawlsian to ignore the uncertainty concerning the possible disappearance of the human species in the future. We conclude with some thoughts about what these results imply for the issue of intergenerational welfare maximization in the presence of global warming.
|Date of creation:||Apr 2009|
|Date of revision:|
|Publication status:||Published in Journal of Mathematical Economics (2010) 46(5): 728-761|
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- 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.
- Humberto Llavador & John E. Roemer & Joaquim Silvestre & Joaquim Silvestre, 2009. "A Dynamic Analysis Of Human Welfare In A Warming Planet”," Working Papers 95, University of California, Davis, Department of Economics.
- Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2008. "A Dynamic Analysis of Human Welfare in a Warming Planet," Cowles Foundation Discussion Papers 1673, Cowles Foundation for Research in Economics, Yale University.
- Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2008. "A Dynamic Analysis of Human Welfare in a Warming Planet," Working Papers 358, Barcelona Graduate School of Economics.
- Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2008. "A dynamic analysis of human welfare in a warming planet," Economics Working Papers 1110, Department of Economics and Business, Universitat Pompeu Fabra, revised Feb 2010.
- Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2009. "A Dynamic Analysis of Human Welfare in a Warming Planet," Cowles Foundation Discussion Papers 1673R, Cowles Foundation for Research in Economics, Yale University.
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03-05, Cornell University, Center for Analytic Economics.
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