Welfare Implications of Non-unitary Time Discounting

Ryoji Ohdoi and Koichi Futagami

MPRA Paper from University Library of Munich, Germany

Abstract: This study proposes a model of non-unitary time discounting and examines its welfare implications. A key feature of our model lies in the disparity of time discounting between multiple distinct goods, which induces an individual's preference reversals even though she normally discounts her future utilities for each good. After characterizing the time-consistent decision-making by such an individual in a general setting, we compare welfare achieved in the market economy and welfare in the planner's allocation from the perspective of all selves across time. Under certain situations, the selves in early periods strictly prefer the social planner's allocation, whereas the selves in future periods strictly prefer the market equilibrium. Therefore, the welfare implications of our model are quite different from those in the canonical discounting model and in models of other time-inconsistent preferences.

Keywords: Non-unitary time discounting; Time inconsistency; Time-consistent tax policy. (search for similar items in EconPapers)
JEL-codes: E21 H21 O41 (search for similar items in EconPapers)
Date: 2019-11-29
New Economics Papers: this item is included in nep-mac and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/97346/1/MPRA_paper_97346.pdf original version (application/pdf)

Related works:
Journal Article: Welfare implications of non-unitary time discounting (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:97346

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().