Social Time Preference

Giancarlo Marini and Pasquale Scaramozzino

No 65, Working Papers from Department of Economics, SOAS University of London, UK

Abstract: The observed practice of discounting the future should not be rationalised on the grounds of myopia or selfishness. A positive rate of pure time preference is necessary to ensure that heterogeneous generations are treated in an egalitarian fashion. A zero social discount rate would yield intertemporal allocations which are biased against the current generations. Endogenous productivity growth requires that the social discount rate be set above the subjective rate of pure time preference. Positive social time preference, far from discriminating against future generations, is essential for a fairer intertemporal allocation of resources.

Pages: 8 pages
Date: 1999-09
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Journal Article: Social time preference (2000)
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