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

Louis Anthony (Tony) Cox () and Emeline D. Cox
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Louis Anthony (Tony) Cox: Cox Associates
Emeline D. Cox: Cox Associates

Chapter Chapter 11 in Risk Analysis of Natural Hazards, 2016, pp 173-195 from Springer

Abstract: 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 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:rischp:978-3-319-22126-7_11

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DOI: 10.1007/978-3-319-22126-7_11

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