Discounting by committee

Antony Millner and Geoffrey Heal

Journal of Public Economics, 2018, vol. 167, issue C, 91-104

Abstract: We study a dynamic social choice problem in which a sequence of committees must decide how to consume a public asset. A committee convened at time t decides on consumption at t, accounting for the behaviour of future committees. Committee members disagree about the appropriate value of the pure rate of time preference, but must nevertheless reach a decision. If each committee aggregates its members' preferences in a utilitarian manner, the collective preferences of successive committees will be time inconsistent, and they will implement inefficient consumption plans. If however committees decide on the level of consumption by a majoritarian vote in each period, they may improve on the consumption plans implemented by utilitarian committees. Using a simple model, we show that this occurs in empirically plausible cases. Application to the problem of choosing the social discount rate is discussed.

Keywords: Collective decisions; Intertemporal choice; Time inconsistency; Social discounting (search for similar items in EconPapers)
JEL-codes: D60 D71 D90 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:167:y:2018:i:c:p:91-104

DOI: 10.1016/j.jpubeco.2018.09.005

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