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Policymaking for Posterity

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  • Summers, Lawrence

    (Harvard U)

  • Zeckhauser, Richard

    (Harvard U)

Abstract

Policymaking for posterity involves current decisions with distant consequences. Contrary to conventional prescriptions, we conclude that the greater wealth of future generations may strengthen the case for preserving environmental amenities; lower discount rates should be applied to the far future, and special effort should be made to avoid actions that impose costs on future generations. Posterity brings great uncertainties. Even massive losses, such as human extinction, however, do not merit infinite negative utility. Given learning, greater uncertainties about damages could increase or decrease the optimal level of current mitigation activities. Policies for posterity should anticipate effects on: alternative investments, both public and private; the actions of other nations; and the behaviors of future generations. Such effects may surprise. This analysis blends traditional public finance and behavioral economics with a number of hypothetical choice problems.

Suggested Citation

  • Summers, Lawrence & Zeckhauser, Richard, 2008. "Policymaking for Posterity," Working Paper Series rwp08-040, Harvard University, John F. Kennedy School of Government.
  • Handle: RePEc:ecl:harjfk:rwp08-040
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Toman Michael, 2014. "The need for multiple types of information to inform climate change assessment," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(3), pages 469-485, December.
    2. Richard Zeckhauser & W. Viscusi, 2008. "Discounting dilemmas: Editors’ introduction," Journal of Risk and Uncertainty, Springer, vol. 37(2), pages 95-106, December.
    3. Robert, Christopher & Zeckhauser, Richard, 2011. "The Methodology of Normative Policy Analysis," Working Paper Series rwp11-004, Harvard University, John F. Kennedy School of Government.
    4. Pedro Conceição & Yanchun Zhang, 2010. "Discounting in the context of climate change economics: the policy implications of uncertainty and global asymmetries," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 12(1), pages 31-57, June.
    5. Gernot Wagner & Richard Zeckhauser, 2012. "Climate policy: hard problem, soft thinking," Climatic Change, Springer, vol. 110(3), pages 507-521, February.
    6. Robert N. Stavins, 2011. "The Problem of the Commons: Still Unsettled after 100 Years," American Economic Review, American Economic Association, pages 81-108.
    7. Buchholz, Wolfgang & Schumacher, Jan, 2010. "Discounting and welfare analysis over time: Choosing the [eta]," European Journal of Political Economy, Elsevier, vol. 26(3), pages 372-385, September.
    8. Kousky, Carolyn & Rostapshova, Olga & Toman, Michael & Zeckhauser, Richard, 2009. "Responding to Threats of Climate Change Mega-Catastrophes," Discussion Papers dp-09-45, Resources For the Future.
    9. Keith Coble & Jayson Lusk, 2010. "At the nexus of risk and time preferences: An experimental investigation," Journal of Risk and Uncertainty, Springer, vol. 41(1), pages 67-79, August.
    10. Pindyck, Robert S., 2012. "Uncertain outcomes and climate change policy," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 289-303.
    11. Scott Farrow & W. Kip Viscusi, 2013. "Towards principles and standards for the benefit–cost analysis of safety," Chapters,in: Principles and Standards for Benefit–Cost Analysis, chapter 5, pages 172-193 Edward Elgar Publishing.
    12. Jamison Dean T. & Jamison Julian, 2011. "Characterizing the Amount and Speed of Discounting Procedures," Journal of Benefit-Cost Analysis, De Gruyter, vol. 2(2), pages 1-56, April.
    13. Burgess David F. & Zerbe Richard O, 2011. "Calculating the Social Opportunity Cost Discount Rate," Journal of Benefit-Cost Analysis, De Gruyter, vol. 2(3), pages 1-10, August.
    14. Louis Kaplow & David Weisbach, 2011. "Discount rates, social judgments, individuals’ risk preferences, and uncertainty," Journal of Risk and Uncertainty, Springer, vol. 42(2), pages 125-143, April.
    15. Robert, Christopher LeBaron & Zeckhauser, Richard Jay, 2010. "The Methodology of Positive Policy Analysis," Scholarly Articles 4450129, Harvard Kennedy School of Government.
    16. Aline Chiabai & Ibon Galarraga & Anil Markandya & Unai Pascual, 2013. "The Equivalency Principle for Discounting the Value of Natural Assets: An Application to an Investment Project in the Basque Coast," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 535-550.

    More about this item

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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