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Combining Rights and Welfarism: a new approach to intertemporal evaluation of social alternatives

Ngo Long and Vincent Martinet

No 2017.18, Working Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: We propose a new criterion reflecting both the concern for rights and the concern for welfare in the evaluation of economic development paths. The concern for rights is captured by a pre-ordering over combinations of thresholds corresponding to floors or ceilings on various quantitative indicators. The resulting constraints on actions and on levels of state variables are interpreted as minimal rights to be guaranteed to all generations, for intergenerational equity purposes. The level of these rights are endogenously chosen, accounting for the « cost in terms of welfare'' of granting them. Such a criterion could embody the idea of sustainable development. We provide an axiomatization of such a criterion and characterize the tension between rights and welfare in a general economic framework. We apply the criterion to the standard Dasgupta-Heal-Solow model of resource extraction and capital accumulation. We show that if the weight given to rights in the criterion is sufficiently high, the optimal solution is on the threshold possibility frontier. The development path is then « driven'' by the rights. In particular, if a minimal consumption is considered as a right, constant consumption can be optimal even with a positive utility discount rate. In this case, the shadow value of the right plays an important role in the determination of the rate of discount to be applied to social investment projects.

Keywords: Rights; welfare; intergenerational equity; sustainability (search for similar items in EconPapers)
JEL-codes: D63 H43 Q01 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-upt
Date: 2017-09
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Forthcoming in Social Choice and Welfare

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http://faere.fr/pub/WorkingPapers/Van%20Long_Martinet_FAERE_WP2017.18.pdf First version, 2017 (application/pdf)

Related works:
Journal Article: Combining rights and welfarism: a new approach to intertemporal evaluation of social alternatives (2018) Downloads
Working Paper: Combining Rights and Welfarism: A New Approach to Intertemporal Evaluation of Social Alternatives (2012) Downloads
Working Paper: Combining Rights and Welfarism: a new approach to intertemporal evaluation of social alternatives (2012) Downloads
Working Paper: Combining Rights and Welfarism: A New Approach to Intertemporal Evaluation of Social Alternatives (2012) Downloads
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