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Discounting, beyond utilitarianism

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  • Fleurbaey, Marc
  • Zuber, Stéphane

Abstract

Discounted utilitarianism and the Ramsey equation prevail in the debate on the discount rate on consumption. The utility discount rate is assumed to be constant and to reflect either the uncertainty about the existence of future generations or a pure preference for the present. The authors question the unique status of discounted utilitarianism and discuss the implications of alternative criteria addressing the key issues of equity in risky situations and variable population. To do so, they introduce a class of intertemporal social objectives, named Expected Prioritarian Equally Distributed Equivalent (EPEDE) criteria. The class is more flexible than Discounted utilitarianism in terms of population ethics and it disentangles risk aversion and inequality aversion. The authors show that these social objectives imply interesting modifications of the Ramsey formula, and shed new light on Weitzman's "dismal theorem".

Suggested Citation

  • Fleurbaey, Marc & Zuber, Stéphane, 2014. "Discounting, beyond utilitarianism," Economics Discussion Papers 2014-40, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwedp:201440
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    Cited by:

    1. Aurélie Méjean & Antonin Pottier & Stéphane Zuber & Marc Fleurbaey, 2017. "Intergenerational equity under catastrophic climate change," Documents de travail du Centre d'Economie de la Sorbonne 17040, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    2. Dean Spears, 2017. "Making people happy or making happy people? Questionnaire-experimental studies of population ethics and policy," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 49(1), pages 145-169, June.
    3. Aurélie Méjean & Antonin Pottier & Marc Fleurbaey & Stéphane Zuber, 2020. "Catastrophic climate change, population ethics and intergenerational equity," Climatic Change, Springer, vol. 163(2), pages 873-890, November.
    4. Piacquadio, Paolo G., 2020. "The ethics of intergenerational risk," Journal of Economic Theory, Elsevier, vol. 186(C).
    5. Fleurbaey, Marc & Zuber, Stéphane, 2015. "Discounting, risk and inequality: A general approach," Journal of Public Economics, Elsevier, vol. 128(C), pages 34-49.
    6. Dean Spears & Mark Budolfson, 2021. "Repugnant conclusions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(3), pages 567-588, October.

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    More about this item

    Keywords

    discounted utilitarianism; social discounting;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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