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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/46516
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| Title: | | Justifying social discounting: The rank-discounted utilitarian approach  |
| Authors: | | Zuber, Stéphane Asheim, Geir B. |
| Issue Date: | | 2010 |
| Series/Report no.: | | CESifo working paper: Public Choice 3192 |
| Abstract: | | The discounted utilitarian criterion for infinite horizon social choice has been criticized for treating generations unequally. We propose an extended rank-discounted utilitarian (ERDU) criterion instead. The criterion amounts to discounted utilitarianism on non-decreasing streams, but it treats all generations impartially: discounting becomes the mere expression of intergenerational inequality aversion. We show that more inequality averse ERDU societies have higher social discount rates when future generations are better-off. We apply the ERDU approach in two benchmark economic growth models and prove that it promotes sustainable policies that maximize discounted utilitarian welfare. |
| Subjects: | | intergenerational equity social discounting discounted utilitarianism sustainability |
| JEL: | | D63 H43 Q56 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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