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Combining Rights and Welfarism: a new approach to intertemporal evaluation of social alternatives

  • Vincent Martinet
  • Ngo Van Long

We propose a new criterion which reflects both the concern for welfare (utility) and the concern for rights in the evaluation of economic development paths. The concern for rights is captured by a pre-ordering over combinations of thresholds (floors or ceilings on various quantitative indicators) that serve as constraints on actions and on levels of state variables. These thresholds are interpreted as minimal rights to be guaranteed to all generations. They are endogenously chosen within the set of all feasible thresholds, accounting for the "cost in terms of welfare" of achieving these rights. We apply the criterion to several examples, including the standard Dasgupta-Heal-Solow model of resource extraction and capital accumulation. We show that if the weight given to rights in the criterion is sufficiently high, the optimal solution may be on the threshold possibility frontier. The development path is then "driven" by the rights. In particular, if a minimal consumption is considered as a right, constant consumption can be optimal even with a positive utility discount rate. The shadow prices of thresholds play an important role in the determination of the rate of discount to be applied to social investment projects.

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Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2012-14.

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Length: 43 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:drm:wpaper:2012-14
Contact details of provider: Postal: 200 Avenue de la République, Bât. G - 92001 Nanterre Cedex
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  1. Sen, Amartya K, 1976. "Liberty, Unanimity and Rights," Economica, London School of Economics and Political Science, vol. 43(171), pages 217-45, August.
  2. Francisco Alvarez-Cuadrado & Ngo Van Long, 2007. "A Mixed Bentham-Rawls Criterion For Intergenerational Equity: Theory And Implications," Departmental Working Papers 2007-03, McGill University, Department of Economics.
  3. Kenneth Stollery, 1998. "Constant Utility Paths and Irreversible Global Warming," Canadian Journal of Economics, Canadian Economics Association, vol. 31(3), pages 730-742, August.
  4. Sen, Amartya, 1970. "The Impossibility of a Paretian Liberal," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 152-57, Jan.-Feb..
  5. Gaertner, Wulf & Pattanaik, Prasanta K & Suzumura, Kotaro, 1992. "Individual Rights Revisited," Economica, London School of Economics and Political Science, vol. 59(234), pages 161-77, May.
  6. Chichilnisky, Graciela, 1995. "An axiomatic approach to sustainable development," MPRA Paper 8609, University Library of Munich, Germany.
  7. Chakravorty, Ujjayant & Moreaux, Michel & Tidball, Mabel, 2006. "Ordering the Extraction of Polluting Nonrenewable Resources," IDEI Working Papers 415, Institut d'Économie Industrielle (IDEI), Toulouse.
  8. Suzumura, Kotaro & Yoshihara, Naoki, 2006. "On Initial Conferment of Individual Rights," Discussion Paper Series a478, Institute of Economic Research, Hitotsubashi University.
  9. Geir Asheim & Stéphane Zuber, 2013. "A complete and strongly anonymous leximin relation on infinite streams," Social Choice and Welfare, Springer, vol. 41(4), pages 819-834, October.
  10. Antoine D'Autume & John Hartwick & Katheline Schubert, 2010. "The Zero Discounting and Maximin Optimal Paths in a Simple Model of Global Warming," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00547282, HAL.
  11. Martinet, V. & Doyen, L., 2007. "Sustainability of an economy with an exhaustible resource: A viable control approach," Resource and Energy Economics, Elsevier, vol. 29(1), pages 17-39, January.
  12. repec:cup:cbooks:9780521331586 is not listed on IDEAS
  13. Martinet, Vincent, 2011. "A characterization of sustainability with indicators," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 183-197, March.
  14. Sen, Amartya Kumar, 1970. "The Impossibility of a Paretian Liberal," Scholarly Articles 3612779, Harvard University Department of Economics.
  15. Sugden, Robert, 1985. "Liberty, Preference, and Choice," Economics and Philosophy, Cambridge University Press, vol. 1(02), pages 213-229, October.
  16. Chichilnisky, Graciela & Heal, Geoffrey & Beltratti, Andrea, 1995. "The Green Golden Rule," Economics Letters, Elsevier, vol. 49(2), pages 175-179, August.
  17. Kotaro Suzumura, 2005. "An interview with Paul Samuelson: welfare economics, “old” and “new”, and social choice theory," Social Choice and Welfare, Springer, vol. 25(2), pages 327-356, December.
  18. Long, Ngo Van, 1979. "Two Theorems on Generalized Diminishing Returns and Their Applications to Economic Analysis," The Economic Record, The Economic Society of Australia, vol. 55(148), pages 58-63, March.
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