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Discounting and altruism to future decision-makers
Department of Economics, Stockholm School of Economics.
2005 (English)In: Journal of Economic Theory, ISSN 0022-0531, E-ISSN 1095-7235, Vol. 122, no 2, 254-266 p.Article in journal (Refereed) Published
Abstract [en]

Is discounting of future decision-makers' consumption utilities consistent with "pure" altruism toward those decision-makers, that is, a concern that they are better off according to their own, likewise forward-looking, preferences? It turns out that the answer is positive for many but not all discount functions used in the economics literature. In particular, "hyperbolic" discounting of the form used by Phelps and Pollak (Rev. Econ. Studies 35 (1968) 201) and Laibson (Quart. J. Econ. 112 (1997) 443) is consistent with exponential altruism towards future generations. More generally, we establish a one-to-one relationship between discount functions and altruism weight systems, and provide sufficient, as well as necessary, conditions for discount functions to be consistent with pure altruism.

Place, publisher, year, edition, pages
2005. Vol. 122, no 2, 254-266 p.
Keyword [en]
altruism, discounting, time preferences
National Category
Economics and Business Mathematics
URN: urn:nbn:se:kth:diva-86710DOI: 10.1016/j.jet.2004.06.003ISI: 000229656500006OAI: diva2:500952
QC 20120221Available from: 2012-02-13 Created: 2012-02-13 Last updated: 2012-02-21Bibliographically approved

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