IDEAS home Printed from https://ideas.repec.org/p/hhs/iuiwop/0575.html
   My bibliography  Save this paper

Discounting and Future Selves

Author

Listed:
  • Sáez-Martí, María

    () (The Research Institute of Industrial Economics)

  • Weibull, Jörgen W.

    () (The Research Institute of Industrial Economics)

Abstract

Is discounting of future instantaneous utilities consistent with altruism towards future selves? More precisely, can temporal preferences, expressed as a sum of discounted instantaneous utilities, be derived from a representation in the form of a sum of discounted total utilities? We find that a representation in the quasi-exponential (ß,d)-form in Phelps and Pollak (1968) and Laibson (1997) correspond to quasi-exponential altruism towards one's future selves. For ß=1/2, these welfare weights are exponential, while for ß 1/2 in favor of one's future selves. More generally, we establish a functional equation which relates welfare weights to instantaneous-utility weights and apply this equation to a number of examples. We also postulate five desiderata for instantaneous-utility discounting. None of the usual discount functions satisfy all desiderata, but we propose a simple class of discount functions which does.

Suggested Citation

  • Sáez-Martí, María & Weibull, Jörgen W., 2002. "Discounting and Future Selves," Working Paper Series 575, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0575
    as

    Download full text from publisher

    File URL: http://www.ifn.se/Wfiles/wp/WP575.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Abel, Andrew B & Bernheim, B Douglas, 1991. "Fiscal Policy with Impure Intergenerational Altruism," Econometrica, Econometric Society, vol. 59(6), pages 1687-1711, November.
    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. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    2. Nicola Dimitri, 2005. "Dynamic Consistency in Extensive form Decision Problems," Department of Economics University of Siena 455, Department of Economics, University of Siena.
    3. Nicolas Vieille & Jörgen Weibull, 2002. "Uniqueness in infinitely repeated decision problems," Working Papers hal-00593648, HAL.
    4. Nicola Dimitri, 2005. "Time Discounting and Time Consistency," Department of Economics University of Siena 456, Department of Economics, University of Siena.

    More about this item

    Keywords

    Altruism; Discounting; Dynamic Inconsistency; Welfare;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    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:hhs:iuiwop:0575. 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: (Elisabeth Gustafsson). General contact details of provider: http://edirc.repec.org/data/iuiiise.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 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.

    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.