IDEAS home Printed from https://ideas.repec.org/p/fae/wpaper/2017.18.html
   My bibliography  Save this paper

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

Author

Listed:
  • Ngo van Long

    (McGill University)

  • Vincent Martinet

    (INRA Economie Publique)

Abstract

We propose a new criterion reflecting both the concern for rights and the concern for welfare in the evaluation of economic development paths. The concern for rights is captured by a pre-ordering over combinations of thresholds corresponding to floors or ceilings on various quantitative indicators. The resulting constraints on actions and on levels of state variables are interpreted as minimal rights to be guaranteed to all generations, for intergenerational equity purposes. The level of these rights are endogenously chosen, accounting for the « cost in terms of welfare'' of granting them. Such a criterion could embody the idea of sustainable development. We provide an axiomatization of such a criterion and characterize the tension between rights and welfare in a general economic framework. We apply the criterion to 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 is 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. In this case, the shadow value of the right plays an important role in the determination of the rate of discount to be applied to social investment projects.

Suggested Citation

  • Ngo van Long & Vincent Martinet, 2017. "Combining Rights and Welfarism: a new approach to intertemporal evaluation of social alternatives," Working Papers 2017.18, FAERE - French Association of Environmental and Resource Economists.
  • Handle: RePEc:fae:wpaper:2017.18
    as

    Download full text from publisher

    File URL: http://faere.fr/pub/WorkingPapers/Van%20Long_Martinet_FAERE_WP2017.18.pdf
    File Function: First version, 2017
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alvarez-Cuadrado, Francisco & Van Long, Ngo, 2009. "A mixed Bentham-Rawls criterion for intergenerational equity: Theory and implications," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 154-168, September.
    2. Geir B. Asheim, 2010. "Intergenerational Equity," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 197-222, September.
    3. Martinet, Vincent, 2011. "A characterization of sustainability with indicators," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 183-197, March.
    4. Sen, Amartya K, 1976. "Liberty, Unanimity and Rights," Economica, London School of Economics and Political Science, vol. 43(171), pages 217-245, August.
    5. Benchekroun, Hassan & Withagen, Cees, 2011. "The optimal depletion of exhaustible resources: A complete characterization," Resource and Energy Economics, Elsevier, vol. 33(3), pages 612-636, September.
    6. Suzumura, Kotaro & Yoshihara, Naoki, 2006. "On Initial Conferment of Individual Rights," Discussion Paper Series a478, Institute of Economic Research, Hitotsubashi University.
    7. Maurice Salles, 2016. "Social choice," Chapters, in: Gilbert Faccarello & Heinz D. Kurz (ed.), Handbook on the History of Economic Analysis Volume III, chapter 36, pages 518-537, Edward Elgar Publishing.
    8. Charles Figuieres & Ngo Van Long & Mabel Tidball, 2016. "The Mixed Bentham-Rawls Intertemporal Choice Criterion and Rawls’ Just Savings Principle," CIRANO Working Papers 2016s-49, CIRANO.
    9. Richard B. Howarth, 1995. "Sustainability under Uncertainty: A Deontological Approach," Land Economics, University of Wisconsin Press, vol. 71(4), pages 417-427.
    10. Tol, Richard S.J., 2013. "Climate policy with Bentham–Rawls preferences," Economics Letters, Elsevier, vol. 118(3), pages 424-428.
    11. Sugden, Robert, 1985. "Liberty, Preference, and Choice," Economics and Philosophy, Cambridge University Press, vol. 1(2), pages 213-229, October.
    12. 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.
    13. Takayama,Akira, 1985. "Mathematical Economics," Cambridge Books, Cambridge University Press, number 9780521314985, May.
    14. Geir Asheim & Stéphane Zuber, 2013. "A complete and strongly anonymous leximin relation on infinite streams," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(4), pages 819-834, October.
    15. Gaertner, Wulf & Pattanaik, Prasanta K & Suzumura, Kotaro, 1992. "Individual Rights Revisited," Economica, London School of Economics and Political Science, vol. 59(234), pages 161-177, May.
    16. Ujjayant Chakravorty & Michel Moreaux & Mabel Tidball, 2008. "Ordering the Extraction of Polluting Nonrenewable Resources," American Economic Review, American Economic Association, vol. 98(3), pages 1128-1144, June.
    17. Benchekroun, Hassan & Withagen, Cees, 2011. "The optimal depletion of exhaustible resources: A complete characterization," Resource and Energy Economics, Elsevier, vol. 33(3), pages 612-636, September.
    18. Burmeister, Edwin & Hammond, P J, 1977. "Maximin Paths of Heterogeneous Capital Accumulation and the Instability of Paradoxical Steady States," Econometrica, Econometric Society, vol. 45(4), pages 853-870, May.
    19. d'Autume, Antoine & Hartwick, John M. & Schubert, Katheline, 2010. "The zero discounting and maximin optimal paths in a simple model of global warming," Mathematical Social Sciences, Elsevier, vol. 59(2), pages 193-207, March.
    20. Lauwers, Luc, 1998. "Intertemporal objective functions: Strong pareto versus anonymity," Mathematical Social Sciences, Elsevier, vol. 35(1), pages 37-55, January.
    21. Matthew O. Jackson & Leeat Yariv, 2015. "Collective Dynamic Choice: The Necessity of Time Inconsistency," American Economic Journal: Microeconomics, American Economic Association, vol. 7(4), pages 150-178, November.
    22. Graciela Chichilnisky, 1996. "An axiomatic approach to sustainable development," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(2), pages 231-257, April.
    23. Sen, Amartya Kumar, 1970. "The Impossibility of a Paretian Liberal," Scholarly Articles 3612779, Harvard University Department of Economics.
    24. Sen, Amartya, 1970. "The Impossibility of a Paretian Liberal," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 152-157, Jan.-Feb..
    25. Bezalel Peleg, 1997. "Effectivity functions, game forms, games, and rights," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 15(1), pages 67-80.
    26. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
    27. Heal, G., 1998. "Valuing the Future: Economic Theory and Sustainability," Papers 98-10, Columbia - Graduate School of Business.
    28. Luc Lauwers, 1997. "Continuity and equity with infinite horizons," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 14(2), pages 345-356.
    29. Kotaro Suzumura, 2005. "An interview with Paul Samuelson: welfare economics, “old” and “new”, and social choice theory," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 25(2), pages 327-356, December.
    30. Chichilnisky, Graciela & Heal, Geoffrey & Beltratti, Andrea, 1995. "The Green Golden Rule," Economics Letters, Elsevier, vol. 49(2), pages 175-179, August.
    31. Partha Dasgupta & Geoffrey Heal, 1974. "The Optimal Depletion of Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 3-28.
    32. 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.
    33. Kenneth Stollery, 1998. "Constant Utility Paths and Irreversible Global Warming," Canadian Journal of Economics, Canadian Economics Association, vol. 31(3), pages 730-742, August.
    34. Asheim, Geir B. & Ekeland, Ivar, 2015. "Resource Conservation across Generations in a Ramsey-Chichilnisky Model," Memorandum 17/2015, Oslo University, Department of Economics.
    35. Deb, Rajat, 1994. "Waiver, Effectivity and Rights as Game Forms," Economica, London School of Economics and Political Science, vol. 61(242), pages 167-178, May.
    36. Van Long, Ngo, 2011. "A dynamic game of environmental exploitation between two countries with sequential maximin objectives," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 1(3), pages 419-433.
    37. Geir B. Asheim & Ivar Ekeland, 2016. "Resource conservation across generations in a Ramsey–Chichilnisky model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 61(4), pages 611-639, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Long, Ngo Van, 2019. "Financing higher education in an imperfect world," Economics of Education Review, Elsevier, vol. 71(C), pages 23-31.
    2. Walter Bossert & Kohei Kamaga, 2020. "An axiomatization of the mixed utilitarian–maximin social welfare orderings," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(2), pages 451-473, March.
    3. Michielsen, T.O., 2013. "Environmental Catastrophes Under Time-inconsistent Preferences," Other publications TiSEM 921f1ff7-67c9-45bc-968d-7, Tilburg University, School of Economics and Management.
    4. Grossmann, Volker & Steger, Thomas M. & Trimborn, Timo, 2013. "The macroeconomics of TANSTAAFL," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 76-85.
    5. Van Long, Ngo, 2016. "The Impacts of Other-Regarding Preferences and Ethical Choice on Environmental Outcomes: A Review of the Literature," Strategic Behavior and the Environment, now publishers, vol. 6(1-2), pages 1-35, December.
    6. Michielsen, T.O., 2013. "Environmental Catastrophes Under Time-inconsistent Preferences," Discussion Paper 2013-013, Tilburg University, Center for Economic Research.
    7. Thomas Michielsen, 2013. "Environmental Catastrophes under Time-Inconsistent Preferences," Working Papers 2013.55, Fondazione Eni Enrico Mattei.
    8. Hartwick, John M. & Long, Ngo Van, 2018. "Sustainability with endogenous discounting when utility depends on consumption and amenities," Mathematical Social Sciences, Elsevier, vol. 95(C), pages 31-36.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cairns, Robert D. & Del Campo, Stellio & Martinet, Vincent, 2019. "Sustainability of an economy relying on two reproducible assets," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 145-160.
    2. Ngo Van Long & Vincent Martinet, 2016. "How to Take Rights Seriously: A New Approach to the Intertemporal Evaluation of Social Alternatives," CIRANO Working Papers 2016s-60, CIRANO.
    3. Martinet, Vincent, 2011. "A characterization of sustainability with indicators," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 183-197, March.
    4. Ben McQuillin & Robert Sugden, 2011. "The representation of alienable and inalienable rights: games in transition function form," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(4), pages 683-706, October.
    5. Vincent Martinet & Pedro Gajardo & Michel De Lara, 2019. "Bargaining with Intertemporal Maximin Payoffs," CESifo Working Paper Series 7471, CESifo.
    6. Vincent Martinet & Pedro Gajardo & Michel De Lara & Héctor Ramírez Cabrera, 2011. "Bargaining with intertemporal maximin payoffs," EconomiX Working Papers 2011-7, University of Paris Nanterre, EconomiX.
    7. Doyen, L. & Martinet, V., 2012. "Maximin, viability and sustainability," Journal of Economic Dynamics and Control, Elsevier, vol. 36(9), pages 1414-1430.
    8. repec:ebl:ecbull:v:30:y:2010:i:1:p:103-114 is not listed on IDEAS
    9. Robert D. Cairns & Stellio Del Campo & Vincent Martinet, 2021. "Intragenerational Inequality Aversion and Intergenerational Equity," CESifo Working Paper Series 8941, CESifo.
    10. Verchère, Alban, 2011. "Le développement durable en question : analyses économiques autour d’un improbable compromis entre acceptions optimiste et pessimiste du rapport de l’Homme à la Nature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 87(3), pages 337-403, septembre.
    11. Geir B. Asheim & Tapan Mitra & Bertil Tungodden, 2016. "Sustainable Recursive Social Welfare Functions," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 165-190, Springer.
    12. Berrens, Robert P. & Polasky, Stephen, 1995. "The Paretian Liberal Paradox and ecological economics," Ecological Economics, Elsevier, vol. 14(1), pages 45-56, July.
    13. Kotaro Suzumura, 2002. "Introduction to social choice and welfare," Temi di discussione (Economic working papers) 442, Bank of Italy, Economic Research and International Relations Area.
    14. Cairns, Robert D. & Martinet, Vincent, 2014. "An environmental-economic measure of sustainable development," European Economic Review, Elsevier, vol. 69(C), pages 4-17.
    15. Figuières, Charles & Long, Ngo Van & Tidball, Mabel, 2017. "The MBR intertemporal choice criterion and Rawls’ just savings principle," Mathematical Social Sciences, Elsevier, vol. 85(C), pages 11-22.
    16. Sebastian Bervoets, 2007. "Freedom of choice in a social context: comparing game forms," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(2), pages 295-315, September.
    17. Enrico Guzzini, 2010. "Efficient Nash equilibria, individual rights and Pareto principle: an impossibility result," Economics Bulletin, AccessEcon, vol. 30(1), pages 103-114.
    18. E. Guzzini & A. Palestrini, 2012. "Coase theorem and exchangeable rights in non-cooperative games," European Journal of Law and Economics, Springer, vol. 33(1), pages 83-100, February.
    19. Geir B. Asheim, 2017. "Sustainable growth," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 49(3), pages 825-848, December.
    20. Herrade Igersheim, 2013. "Invoking a Cartesian product structure on social states," Theory and Decision, Springer, vol. 74(4), pages 463-477, April.
    21. Piacquadio Paolo G. & Di Bartolomeo Giovanni & Acocella Nicola, 2009. "A simple framework for investigating the properties of policy games," wp.comunite 0059, Department of Communication, University of Teramo.

    More about this item

    Keywords

    Rights; welfare; intergenerational equity; sustainability;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fae:wpaper:2017.18. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/faereea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mireille Chiroleu-Assouline (email available below). General contact details of provider: https://edirc.repec.org/data/faereea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.