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No discounting as a moral virtue in intertemporal choice models

Author

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  • Vipul Bhatt

    (Department of Economics, James Madison University)

Abstract

Should we discount our own future or should we apply an equal concern to all parts of our life? Many moral philosophers regard no discounting as a virtue. We present arguments on both sides of this debate. A critical comparison of the two conflicting viewpoints on the issue of discounting yields two conclusions. First, no discounting may have undesirable implications in certain economic settings and is often inconsistent with observed individual behavior. Although important in its own right, such an argument falls short of providing a moral basis for discounting. Second, from a normative perspective, there is a strong ethical foundation for no discounting in models of intertemporal choice.

Suggested Citation

  • Vipul Bhatt, 2014. "No discounting as a moral virtue in intertemporal choice models," Keio-IES Discussion Paper Series 2014-003, Institute for Economics Studies, Keio University.
  • Handle: RePEc:keo:dpaper:2014-003
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    References listed on IDEAS

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    3. Solow, Robert M, 1974. "The Economics of Resources or the Resources of Economics," American Economic Review, American Economic Association, vol. 64(2), pages 1-14, May.
    4. Partha Dasgupta, 2007. "Commentary: The Stern Review's Economics of Climate Change," National Institute Economic Review, National Institute of Economic and Social Research, vol. 199(1), pages 4-7, January.
    5. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
    6. Olson, Mancur & Bailey, Martin J, 1981. "Positive Time Preference," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 1-25, February.
    7. Martin L. Weitzman, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 703-724, September.
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    Cited by:

    1. Vipul Bhatt & Masao Ogaki & Yuichi Yaguchi, 2015. "Normative Behavioural Economics Based on Unconditional Love and Moral Virtue," The Japanese Economic Review, Japanese Economic Association, vol. 66(2), pages 226-246, June.
    2. Vipul Bhatt & Masao Ogaki & Yuichi Yaguchi, 2017. "Introducing Virtue Ethics into Normative Economics for Models with Endogenous Preferences," RCER Working Papers 600, University of Rochester - Center for Economic Research (RCER).
    3. Vipul Bhatt & Masao Ogaki & Yuichi Yaguchi, 2014. "A Reformulation of Normative Economics for Models with Endogenous Preferences," IMES Discussion Paper Series 14-E-02, Institute for Monetary and Economic Studies, Bank of Japan.

    More about this item

    Keywords

    Intertemporal discounting; Moral virtues; Time Preference; Discount Factor; Ethics;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics

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