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The fairness of discounting: A majority rule approach

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Abstract

A model of majority rule is developed in which each of a finite number of generations votes on a redistribution of income between itself and the other generations. In voting, each generation expresses tastes for its own income and for the distribution of income across generations. The model is then used to derive the conditions under which discounting is justified — namely those conditions for which the majority rule exhibits a positive marginal rate of time preference. It is demonstrated that when each generation is wealthier than those preceding it, the parameters representing the taste for income equality must be relatively high for the majority rule to exhibit a positive marginal rate of time preference.

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Authors and Affiliations

  1. Research Department, Federal Reserve Bank of Dallas, 75222, Dallas, TX

    S. P. A. Brown

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  1. S. P. A. Brown
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Additional information

I thank Martin J. Bailey, Charles C. Brown, John K. Hill, William T. Long III, Martin C. McGuire, Gerald P. O'Driscoll Jr., Joe Oppenheimer, James E. Pearce and Eugenie D. Short for their valuable comments and suggestions. The views expressed are mine and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System.

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Brown, S.P.A. The fairness of discounting: A majority rule approach. Public Choice 55, 215–226 (1987). https://doi.org/10.1007/BF00124867

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