Justifying social discounting: the rank-discounted utilitarian approach

Stéphane Zuber

No 2010036, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: The popular discounted utilitarian criterion for infinite horizon social choice has been criticized on the ground that it treats successive generations unfairly. I propose to evaluate intergenerational welfare with a rank- discounted utilitarian (RDU) criterion instead. The criterion amounts to discounted utilitarianism on non-decreasing paths, but it treats all generations impartially: discounting becomes the mere expression of intergenerational inequality aversion. I show that more inequality averse RDU societies have higher social discount rates when future generations are better-off. I apply the RDU approach in two benchmark economic growth models and I prove that it promotes sustainable policies maximizing discounted utility.

Keywords: intergenerational equity; social discounting; discounted utilitarianism; sustainability (search for similar items in EconPapers)
JEL-codes: D63 H43 Q56 (search for similar items in EconPapers)
Date: 2010-07-01
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Justifying social discounting: The rank-discounted utilitarian approach (2012)
Working Paper: Justifying Social Discounting: The Rank-Discounted Utilitarian Approach (2010)
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