Abstract
We study the problem of aggregating discounted utility preferences into a social discounted utility preference model. We use an axiom capturing a social responsibility of individuals’ attitudes to time, called consensus Pareto. We show that this axiom can provide consistent foundations for welfare judgments. Moreover, in conjunction with the standard axioms of anonymity and continuity, consensus Pareto can help adjudicate some fundamental issues related to the choice of the social discount rate: the society selects the rate through a generalized median voter scheme.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Barsky, R.B., Juster, F.T., Kimball, M.S., Shapiro, M.D.: Preference parameters and behavioral heterogeneity: An experimental approach in the health and retirement study. QJE 112, 537–579 (1997)
Becker, G.S., Mulligan, C.B.: The endogenous determination of time preference. Q. J. Econ. 112(3), 729–758 (1997)
Billot, A., Qu, X.: Perfect Altruism Breeds Time Consistency, working paper (2021)
Billot, A., Qu, X.: Utilitarian Aggregation with Reasonably Heterogeneous Beliefs, mimeo (2017)
Chambers, C.P., Echenique, F.: On multiple discount rates. Econometrica 86, 1325–1346 (2018)
Chichilnisky, G.: Social aggregation rules and continuity. Q. J. Econ. 97, 337–52 (1982)
Collective, Geber A.: Preferences, Time. In: Laslier, J.F., Moulin, H., Sanver, M., Zwicker, W. (eds.) The Future of Economic Design. Studies in Economic Design. Springer, Cham (2019)
Dohmen, T., Enke, B., Falk, A., Huffman, D., Sunde, U.: Patience and the Wealth of Nations. Working Papers (2016) 12, Human Capital and Economic Opportunity Working Group
Epstein, L.G.: Stationary cardinal utility and optimal growth under uncertainty. J. Econ. Theory 31, 133–152 (1983)
Feng, T., Ke, S.: Social discounting and intergenerational Pareto. Econometrica 86, 1537–1567 (2018)
Gayer, G., Gilboa, I., Samuelson, L., Schmeidler, D.: Pareto Efficiency with Different Beliefs. J. Legal Stud. 43, 151–171 (2014)
Halevy, Y.: Time consistency: stationarity and time invariance. Econometrica 83, 335–352 (2015)
Harsanyi, J.C.: Cardinal welfare, individualistic ethics, and interpersonal comparisons of utility. J. Polit. Econ. 63, 309–321 (1955)
Hayashi, T.: Consistent updating of social welfare functions. Soc. Choice Welf. 46, 569–608 (2016)
Jackson, M.O., Yariv, L.: Collective dynamic choice: the necessity of time inconsistency. AEJ: Microeconomics 7.4, 150-78 (2015)
Koopmans, T.C.: Stationary ordinal utility and impatience. Econometrica , 287–309 (1960)
Lawrance, E.C.: Poverty and the rate of time preference: evidence from panel data. J. Polit. Econ. 99, 54–77 (1991)
Millner, A., Heal, G.: Resolving Intertemporal Conflicts: Economics vs Politics. NBER Working Paper No. 20705, (November 2014)
Millner, A., Heal, G.: Time consistency and time invariance in collective intertemporal choice. J. Econ. Theory 176, 158–169 (2018)
Mongin, P.: Consistent Bayesian Aggregation. J. Econ. Theory 66, 313–351 (1995)
Moulin, H.: On strategy-proofness and single peakedness. Public Choice 35, 437–455 (1980)
Savage, Leonard J.: The foundations of statistics. Courier Corporation (1972)
Tanaka, T., Camerer, C.F., Nguyen, Q.: Risk and time preferences: Linking experimental and household survey data from Vietnam. Am. Econ. Rev. 100, 557–71 (2010)
Zuber, S.: The aggregation of preferences: can we ignore the past? Theory Decis. 70, 367–384 (2011)
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
About this article
Cite this article
Hayashi, T., Lombardi, M. Social discount rate: spaces for agreement. Econ Theory Bull 9, 247–257 (2021). https://doi.org/10.1007/s40505-021-00209-9
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s40505-021-00209-9