Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/252143 
Authors: 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9626
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
I study whether saving behavior reveals socially relevant intertemporal preferences. To this end, I decompose the present generation's preference for the next into its dynastic and cross-dynastic components in a model of saving. If people are concerned about the next generation as such, 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. Numerically, I show that even \small" preferences for the next generation as such can lower the efficient discount rate by 20% to 40%, as compared to Nordhaus' calibration.
Subjects: 
intergenerational altruism
social discounting
time-inconsistency
declining discount rates
generalized consumption Euler equations
interdependent utility
isolation paradox
JEL: 
D64
D71
H43
Q01
Q54
Document Type: 
Working Paper
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