Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/242961
Authors: 
Nesje, Frikk
Year of Publication: 
2021
Abstract: 
This paper studies whether saving behavior reveals socially relevant intertemporal preferences. I decompose the present generation's preference for the next into its dynastic and cross-dynastic components. If people are concerned about sustainability or if their descendants move or marry, then they might assign welfare weights on other dynasties. With such cross-dynastic intergenerational altruism, saving for one's descendants benefits present members of other dynasties. These preference externalities imply that socially relevant intertemporal preferences cannot be inferred from saving behavior. The external effect of present saving decreases over time. This means that intertemporal preferences inferred from saving behavior are time-inconsistent.
Subjects: 
Intergenerational altruism
Social discounting
Time-inconsistency
Declining discount rates
Generalized consumption Euler equations
Interdependent utility
Isolation paradox
Climate change
JEL: 
D64
D71
H43
Q01
Q54
Document Type: 
Working Paper

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