Intergenerational Justice when Future Worlds Are Uncertain

Humberto Llavador, John Roemer and Joaquim Silvestre

No 1692, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Suppose that there exists a positive (exogenous) probability that at each date of a possibly infinite future, the human species will disappear. We postulate an Ethical Observer (EO) who must solve an intertemporal welfare maximization problem under this kind of uncertainty, with preferences that satisfy the expected utility hypothesis. Various social welfare criteria are expressed as alternative von Neumann-Morgenstern utility functions for the EO: utilitarianism, Rawlsianism, and an extension of the latter that corrects for the size of population. Our analysis covers, first, a simple cake-eating economy, where the utilitarian and Rawlsian recommend the same intergenerational allocation. Second, we consider a productive economy with education and capital. There, however, the recommendations of the two Ethical Observers are in general (but not always) different. Surprisingly, when the utilitarian optimization program diverges, then it is optimal for the extended Rawlsian to ignore the uncertainty concerning the possible disappearance of the human species in the future. We conclude with some thoughts about what these results imply for the issue of intergenerational welfare maximization in the presence of global warming.

Keywords: Discounted utilitarianism; Rawlsian; Sustainability; Maximin; Uncertainty; Expected utility; von Neumann-Morgenstern; Dynamic welfare maximization (search for similar items in EconPapers)
JEL-codes: D63 D81 O40 Q54 Q56 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2009-04
New Economics Papers: this item is included in nep-ene and nep-upt
Note: CFP 1324.
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Citations: View citations in EconPapers (12)

Published in Journal of Mathematical Economics (2010) 46(5): 728-761

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Related works:
Working Paper: Intergenerational Justice When Future Worlds are Uncertain (2015)
Journal Article: Intergenerational justice when future worlds are uncertain (2010)
Working Paper: Intergenerational justice when future worlds are uncertain (2010)
Working Paper: ?Intergenerational justice when future worlds are uncertain? (2009)
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