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Intergenerational equity, efficiency and constructability

Luc Lauwers

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: Global environmental issues - like biodiversity conservation or climate change - are in reality long term issues that are not properly taken into account with traditional models that incorporate the impatience axiom manifested in fixed discount factors and in the use of present discounted utility criteria. When both the short and the very long run are important, one can appeal to overtaking criteria and Chichilnisky criteria. Unfortunately, overtaking criteria are highly incomplete. In order to decrease this incompleteness, stronger anonymity (or equity) axioms were developed. I show that a maximal anonymity axiom compatible with Pareto is a non-constructible object; its existence relies on the Axiom of Choice. The Chichilnisky criterion is based upon two axioms: non dictatorship of the present and non dictatorship of the future. Here, the very long run is captured by a finitely additive measure. Such a measure is a non-constructible object and has therefore no explicit description.

Date: 2010-07
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (4)

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Related works:
Chapter: Intergenerational Equity, Efficiency, and Constructibility (2016)
Journal Article: Intergenerational equity, efficiency, and constructibility (2012) Downloads
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