Sustainable preferences via nondiscounted, hyperreal intergenerational welfare functions
We define an intergenerational social welfare function Sigma from |R^|N (the set of all infinite-horizon utility streams) into *|R (the ordered field of hyperreal numbers). The function Sigma is continuous, linear, and increasing, and is well-defined even on unbounded (e.g. exponentially increasing) utility streams. This yields a complete social welfare ordering on |R^|N which is Pareto and treats all generations equally (i.e. does not discount future utility). In particular, it is what Chichilnisky (1996) calls a `sustainable' preference ordering: it is neither a `dictatorship of the present' nor a `dictatorship of the future'. We then show how an agent with no `pure' time preferences may still `informationally discount' the future, due to uncertainty. Last, we model intergenerational choice for an exponentially growing economy and population. In one parameter regime, our model shows `instrumental discounting' due to declining marginal utility of wealth. In another regime, we see a disturbing `Paradox of Eternal Deferral'.
|Date of creation:||05 Mar 2008|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andrew Caplin & John Leahy, 2000.
"The Social Discount Rate,"
NBER Working Papers
7983, National Bureau of Economic Research, Inc.
- Andrew Caplin & John Leahy, 2001. "The social discount rate," Discussion Paper / Institute for Empirical Macroeconomics 137, Federal Reserve Bank of Minneapolis.
- Lauwers, Luc, 2000.
"Topological social choice,"
Mathematical Social Sciences,
Elsevier, vol. 40(1), pages 1-39, July.
- Graciela Chichilnisky, 1996.
"An axiomatic approach to sustainable development,"
Social Choice and Welfare,
Springer, vol. 13(2), pages 231-257, April.
- Araujo, Aloisio, 1985. "Lack of Pareto Optimal Allocations in Economies with Infinitely Many Commodities: The Need for Impatience," Econometrica, Econometric Society, vol. 53(2), pages 455-61, March.
- Esteban Induráin & José Ramón Uriarte & Juan Carlos Candeal, 1997. "Some issues related to the topological aggregation of preferences: addendum (*)," Social Choice and Welfare, Springer, vol. 14(2), pages 359-361.
- Kirman, Alan P. & Sondermann, Dieter, 1972.
"Arrow's theorem, many agents, and invisible dictators,"
Journal of Economic Theory,
Elsevier, vol. 5(2), pages 267-277, October.
- KIRMAN, Alan P. & SONDERMANN, Dieter, . "Arrow's theorem, many agents, and indivisible dictators," CORE Discussion Papers RP 118, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, 1.
- Fishburn, Peter C., 1970. "Arrow's impossibility theorem: Concise proof and infinite voters," Journal of Economic Theory, Elsevier, vol. 2(1), pages 103-106, March.
- Lauwers, Luc, 1993. "Infinite Chichilnisky rules," Economics Letters, Elsevier, vol. 42(4), pages 349-352.
- Efimov, Boris A. & Koshevoy, Gleb A., 1994. "A topological approach to social choice with infinite populations," Mathematical Social Sciences, Elsevier, vol. 27(2), pages 145-157, April.
- Brown, Donald J & Lewis, Lucinda M, 1981.
"Myopic Economic Agents,"
Econometric Society, vol. 49(2), pages 359-68, March.
- Graciela Chichilnisky & Geoffrey Heal, 1997.
"Social choice with infinite populations: construction of a rule and impossibility results,"
Social Choice and Welfare,
Springer, vol. 14(2), pages 303-318.
- Chichilnisky, G. & Heal, G.M., 1995. "Social Choice with Infinite Populations: Construction of a Rule and Impossibility Results," Papers 95-19, Columbia - Graduate School of Business.
- Campbell, Donald E., 1990. "Intergenerational social choice without the Pareto principle," Journal of Economic Theory, Elsevier, vol. 50(2), pages 414-423, April.
- Lauwers, Luc & Van Liedekerke, Luc, 1995. "Ultraproducts and aggregation," Journal of Mathematical Economics, Elsevier, vol. 24(3), pages 217-237.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:7461. 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: (Joachim Winter)
If references are entirely missing, you can add them using this form.