Journal of Risk and Uncertainty

, Volume 37, Issue 2, pp 115–140

Policymaking for posterity

Authors

  • Lawrence Summers
    • Harvard University
    • Harvard University
Article

DOI: 10.1007/s11166-008-9052-y

Cite this article as:
Summers, L. & Zeckhauser, R. J Risk Uncertain (2008) 37: 115. doi:10.1007/s11166-008-9052-y

Abstract

Policymaking for posterity involves current decisions with distant consequences. Contrary to conventional prescriptions, we conclude that the greater wealth of future generations may strengthen the case for preserving environmental amenities; lower discount rates should be applied to the far future, and special effort should be made to avoid actions that impose costs on future generations. Posterity brings great uncertainties. Even massive losses, such as human extinction, however, do not merit infinite negative utility. Given learning, greater uncertainties about damages could increase or decrease the optimal level of current mitigation activities. Policies for posterity should anticipate effects on: alternative investments, both public and private; the actions of other nations; and the behaviors of future generations. Such effects may surprise. This analysis blends traditional public finance and behavioral economics with a number of hypothetical choice problems.

Keywords

Discounting Posterity Altruism Comet problem Trolley problem Climate change Global warming Uncertainty Learning Reaction function

JEL Classification

D90 D64 Q54 D81

Copyright information

© Springer Science+Business Media, LLC 2008