Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46516 
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper No. 3192
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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
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