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Social time preference


The observed practice of discounting the future should not be rationalised on the grounds of myopia or selfishness. A positive rate of pure time preference is necessary to ensure that heterogeneous generations are treated in an egalitarian fashion. A zero social discount rate would yield intertemporal allocations which are biased against the current generations. Endogenous productivity growth requires that the social discount rate be set above the subjective rate of pure time preference. Positive social time preference, far from discriminating against future generations, is essential for a fairer intertemporal allocation of resources.

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Received: 3 July 1999/Accepted: 6 October 1999

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Marini, G., Scaramozzino, P. Social time preference. J Popul Econ 13, 639–645 (2000).

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  • JEL classification: 43
  • Key words: Social discount rate, overlapping generations