Advertisement

Intergenerational Justice in Protective and Resilience Investments with Uncertain Future Preferences and Resources

  • Louis Anthony (Tony) CoxJr.Email author
  • Emeline D. Cox
Part of the Risk, Governance and Society book series (RISKGOSO, volume 19)

Abstract

How much should each generation invest in building resilient infrastructure to protect against possible future natural disasters? If such disasters are infrequent, members of each generation may be tempted to defer investments in resilience and protective infrastructure (e.g., in building or improving dams and levees; retrofitting office and residential buildings; creating more robust transportation, power, and communications networks; etc.) in favor of consumption or growth. Succumbing to this temptation imposes risks on future generations of needlessly large losses or disproportionate need to invest in resilience. Yet, even the most dutiful and altruistic present generation has limited obligations to invest to protect future ones, especially if present investments in resilience reduce growth and future prosperity, or if the preferences, priorities, resources, and capabilities of future generations are highly uncertain. This paper discusses several different frameworks for clarifying how much each generation should invest in protection. Optimal economic growth models provide a well-developed technical framework for maximizing average or minimal expected social utility over time, but require consistency and cooperation over time that may not be psychologically or politically realistic. If investment decisions are viewed as a form of dynamic “dictator game” in which earlier generations choose how to allocate benefits between themselves and later generations, then insights from behavioral economics, risk psychology, and moral psychology suggest cues related to deservingness and trustworthiness that powerfully affect what is perceived as fair and right in such settings. A Rawlsian concept of justice (what investment decision rules would people choose from behind a veil of ignorance, in which no one knew what generation he or she would be born into?) solves the problems of over-discounting long-delayed and uncertain consequences that have frustrated some previous efforts to apply cost-benefit analysis to ethically charged issues involving intergenerational justice. We suggest several principles for applying insights from these different frameworks to investments in building resilient communities and mitigating natural disaster risks across generations.

Keywords

Capital Stock Moral Intuition Dictator Game Stochastic Dynamic Programming Nash Bargaining Solution 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

References

  1. Bahr G, Requate T (2014) Reciprocity and giving in a consecutive three-person dictator game with social interaction. Ger Econ Rev 15(3):374–392MathSciNetCrossRefGoogle Scholar
  2. Balbus ÃL, Nowak AS (2008) Existence of perfect equilibria in a class of multigenerational stochastic games of capital accumulation. Automatica 44(6):1471–1479zbMATHMathSciNetCrossRefGoogle Scholar
  3. Bretherton D, Ride A (2011) Community resilience in natural disasters. Palgrave Macmillan, New YorkCrossRefGoogle Scholar
  4. D’Albis H, Ambech S (2010) Fair intergenerational sharing of a natural resource. Math Soc Sci 59(2):170–183zbMATHCrossRefGoogle Scholar
  5. Haidt J (2012) The righteous mind: why good people are divided by politics and religion. Pantheon, New YorkGoogle Scholar
  6. Hamilton K (1995) Sustainable development, the Hartwick rule and optimal growth. Env Resour Econ 5(4):393–411CrossRefGoogle Scholar
  7. Hoberg N, Baumgärtner S (2011) Irreversibility, ignorance, and the intergenerational equity-efficiency trade-off. University of Lüneburg Working Paper Series in Economics no. 198. www.leuphana.de/institute/ivwl/publikationen/working-papers.html
  8. Howarth BR, Norgaard BR (1990) Intergenerational resource rights, efficiency, and social optimality. Land Econ 66(1):1–11CrossRefGoogle Scholar
  9. Kahneman D (2011) Thinking fast and slow. Farrar, Straus, and Giroux, New YorkGoogle Scholar
  10. Krautkraemer AJ, Batina GR (1999) On sustainability and intergenerational transfers with a renewable resource. Land Econ 75(2):167–184CrossRefGoogle Scholar
  11. Krysiak FC, Collado IG (2009) Sustainability and its relation to efficiency under uncertainty. Economic Theory 41(2):297–315zbMATHMathSciNetCrossRefGoogle Scholar
  12. List JA (2007) On the interpretation of giving in dictator games. J Polit Econ 115(3):482–493MathSciNetCrossRefGoogle Scholar
  13. Llavadora H, Roemer JE, Silvestre J (2010) Intergenerational justice when future worlds are uncertain. J Math Econ 46(5):728–761CrossRefGoogle Scholar
  14. Lucini B (2014) Disaster resilience from a sociological perspective: exploring three Italian earthquakes as models for disaster resilience planning. Springer, SwitzerlandCrossRefGoogle Scholar
  15. Manzini P, Mariotti M, Veneziani R (2010) Intergenerational justice in the Hobbesian state of nature. Economics Department Working Paper Series. Paper 108. http://scholarworks.umass.edu/econ_workingpaper/108
  16. Meyer L (2009) Intergenerational justice. In: Zalta EN (ed) The Stanford encyclopedia of philosophy (Winter 2014 Edition). http://plato.stanford.edu/archives/win2014/entries/justice-intergenerational/
  17. Nehring K (2005) The (im)possibility of a paretian rational. Mimeo. Available at http://www.sss.ias.edu/publications/papers/econpaper68.pdf
  18. Oliver P, Hauser OP, Rand DG, Peysakhovich A, Nowak MA (2014) Cooperating with the future. Nature 511(7508):220–223. doi: 10.1038/nature13530 CrossRefADSGoogle Scholar
  19. Olson LJ (2005) Theory of stochastic optimal economic growth. http://faculty.smu.edu/sroy/olson-roy-handbook.pdf
  20. Parfit D (1984) Reasons and persons. Oxford University Press, OxfordGoogle Scholar
  21. Phelps E (1961) The golden rule of accumulation: a fable for growthmen. Am Econ Rev 51(4):638–643. http://www.jstor.org/stable/1812790
  22. Ramsey FP (1928) A mathematical theory of savings. Econ J 38(152):543–559CrossRefGoogle Scholar
  23. Rawls J (2001) Justice as fairness. Harvard University Press, CambridgeGoogle Scholar
  24. Schmidtz D (2011) Nonideal theory: what it is and what it needs to be. Ethics 121(4):772–796. doi: 10.1086/660816 CrossRefGoogle Scholar
  25. Solow RM (1956) A contribution to the theory of economic growth. Q J Econ 70(1):65–94. doi: 10.2307/1884513. JSTOR 1884513 CrossRefGoogle Scholar
  26. Swan TW (1956) Economic growth and capital accumulation. Econ Rec (Wiley) 32(2):334–361. doi: 10.1111/j.1475-4932.1956.tb00434.x CrossRefGoogle Scholar
  27. Tierney K (2013) “Only connect!” social capital, resilience, and recovery. Risk Hazards Crisis Public Policy 4(1):1–5CrossRefGoogle Scholar
  28. Van Liederkerke L (2004) Discounting the future: John Rawls and Derek Parfits’ critique of the discount rate. Ethical Perspect 11(1):72–83. http://www.sehn.org/tccpdf/tccdiscounting%20future.pdf
  29. Wolf C (2007) Intergenerational justice. In: Frey RG, Wellman CH (eds) A companion to applied ethics, chap 21. Wiley, New York. http://www.public.iastate.edu/~jwcwolf/Papers/Wolf_Intergenerational_Justice.pdf

Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  1. 1.Cox AssociatesDenverUSA

Personalised recommendations