Hostname: page-component-cd9895bd7-q99xh Total loading time: 0 Render date: 2024-12-27T05:06:09.408Z Has data issue: false hasContentIssue false
  • English
  • Français

PURE TIME PREFERENCE IN INTERTEMPORAL WELFARE ECONOMICS

Published online by Cambridge University Press:  05 May 2017

J. Paul Kelleher
J. Paul Kelleher*
Affiliation:
University of Wisconsin-Madison, Medical Sciences Center, 1300 University Ave., Room 1430, Madison, WI, 53706, USA. Email: [email protected]. URL: https://medhist.wisc.edu/faculty/kelleher/index.shtml.
Get access Rights & Permissions [Opens in a new window]

Abstract:

Several areas of welfare economics seek to evaluate states of affairs as a function of interpersonally comparable individual utilities. The aim is to map each state of affairs onto a vector of individual utilities, and then to produce an ordering of these vectors that can be represented by a mathematical function assigning a real number to each. When this approach is used in intertemporal contexts, a central theoretical question concerns the rate of pure time preference, i.e. the evaluative weight to be applied to utility coming at different times. This article criticizes the standard philosophical account of pure time preference, arguing that it ascribes to economists a methodological commitment they need not accept. The article then evaluates three further objections to pure time preference, concluding that it might still be defensible under certain circumstances. I close by articulating a final argument that, if sound, would constitute a decisive objection to pure time preference as it currently figures in much intertemporal welfare economics.

Keywords

Social discount ratediscounted utilitarianismtime preferencefuture generationsintergenerational equity
Type
Articles
Information
Economics & Philosophy , Volume 33 , Issue 3 , November 2017 , pp. 441 - 473
Check for updates
Copyright
Copyright © Cambridge University Press 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Adler, M. D. 2012. Well-being and Fair Distribution: Beyond Cost-benefit Analysis. New York, NY: Oxford University Press.Google Scholar
Adler, M. D. and Treich, N.. 2015. Prioritarianism and climate change. Environmental and Resource Economics 62 (2): 279–308.Google Scholar
Alexander, L. and Moore, M.. 2012. Deontological ethics. In The Stanford Encyclopedia of Philosophy (Winter 2016 Edition), ed. Zalta, E. N.. URL: <http://plato.stanford.edu/archives/spr2015/entries/ethics-deontological/>..>Google Scholar
Arrow, K. 1995. Intergenerational equity and the rate of discount in long-term social investment. Unpublished paper presented to IEA World Congress. URL: < http://www-siepr.stanford.edu/workp/swp97005.pdf>..>Google Scholar
Arrow, K. 1999. Discounting, morality, and gaming. In Discounting and Intergenerational Equity, ed. Portney, P. R. and Weyant, J. P., 13–21. New York, NY: Resources for the Future.Google Scholar
Arrow, K., Cline, W., Maler, K.-G., Munasinghe, M., Squitieri, R. and Stiglitz, J.. 1996. Intertemporal equity, discounting and economic efficiency. In Climate Change 1995: Economic and Social Dimensions of Climate Change, ed. Bruce, J. et al., 128–144. Cambridge: Cambridge University Press.Google Scholar
Asheim, G. B. and Buchholz, W.. 2003. The malleability of undiscounted utilitarianism as a criterion of intergenerational justice. Economica 40: 405–422.Google Scholar
Beckerman, W. and Hepburn, C.. 2007. Ethics of the discount rate in the Stern Review on the Economics of Climate Change. World Economics 8: 187–210.Google Scholar
Broome, J. 1992. Counting the Costs of Global Warming. Cambridge: The White Horse Press.Google Scholar
Broome, J. 1994. Discounting the future. Philosophy and Public Affairs 23 (2): 128–156.Google Scholar
Broome, J. 2002. All goods are relevant. In Summary Measures of Population Health, ed. Murray, C. J. L., Salomon, J. A., Mathers, C. D. and Lopez, A. D., 727–729. Geneva: World Health Organization.Google Scholar
Broome, J. 2004. Weighing Lives. Oxford: Oxford University Press.Google Scholar
Broome, J. 2008. The ethics of climate change. Scientific American 298 (6): 96–102.Google Scholar
Broome, J. 2012. Climate Matters: Ethics in a Warming World. New York, NY: W. W. Norton and Company.Google Scholar
Brown, C. 2011. Consequentialize this. Ethics 121 (4): 749–771.Google Scholar
Caney, S. 2008. Human rights, climate change, and discounting. Environmental Politics 17 (4): 536–555.Google Scholar
Caney, S. 2014. Climate change, intergenerational equity and the social discount rate. Politics, Philosophy and Economics 13 (4): 320–342.Google Scholar
Cowen, T. and Parfit, D.. 1992. Against the social discount rate. In Justice Between Age Groups and Generations, ed. Laslett, P. and Fishkin, J. S., 144–161. New Haven, CT: Yale University Press.Google Scholar
Clarkson, R. and Deyes, K.. 2002. Estimating the social cost of carbon emissions. GES Working Paper 140, London: HM Treasury. URL: <ftp://131.252.97.79/Transfer/ES_Pubs/ESVal/carbon_val/clarkson_02_socialCostCarbon_ukgov140.pdf>..>Google Scholar
Cline, W. R. 1992. The Economics of Global Warming. Washington, DC: Institute for International Economics.Google Scholar
Cline, W. R. 1998. Equity and discounting in climate-change decisions. In Economics and Policy Issues in Climate Change, ed. Nordhaus, W. D., 97–104. New York, NY: Resources for the Future.Google Scholar
Cline, W. R. 2012. Intergenerational discounting and global economic policies. Remarks at the conference on 'Ethics and Globalization: Tradeoffs Behind Policy Choices', Washington, 7 January 2012, Peterson Institute for International Economics. URL: <http://iie.com/publications/papers/cline20130107.pdf>..' href=https://scholar.google.com/scholar?q=Cline,+W.+R.+2012.+Intergenerational+discounting+and+global+economic+policies.+Remarks+at+the+conference+on+'Ethics+and+Globalization:+Tradeoffs+Behind+Policy+Choices',+Washington,+7+January+2012,+Peterson+Institute+for+International+Economics.+URL:+.>Google Scholar
Dasgupta, P. 2001. Human Well-Being and the Natural Environment. Oxford: Oxford University Press.Google Scholar
Dasgupta, P. 2005. Three conceptions of intergenerational justice. In Ramsey's Legacy, ed. Lillehammer, H. and Mellor, D. H., 149–69. Oxford: Oxford University Press.Google Scholar
Dasgupta, P. 2008. Discounting climate change. Journal of Risk and Uncertainty 37: 141–169.Google Scholar
Dasgupta, P. 2011. The ethics of intergenerational distribution: reply and response to John E. Roemer. Environmental and Resource Economics 50: 475–493.Google Scholar
Dasgupta, P. 2012. Time and the generations. In Climate Change and Common Sense: Essays in Honor of Tom Schelling, ed. Hahn, R. and Ulph, A., 101–130. Oxford: Oxford University Press.Google Scholar
Dasgupta, P. and Heal, G. M.. 1979. Economic Theory and Exhaustible Resources. Cambridge: Cambridge University Press.Google Scholar
Dasgupta, P., Sen, A. and Marglin, S.. 1972. Guidelines for Project Evaluation. New York, NY: United Nations.Google Scholar
Davidson, M. 2014. Zero discounting can compensate future generations for climate damage. Ecological Economics 105: 40–47.Google Scholar
Dietz, S., Hepburn, C. and Stern, N.. 2009. Economics, ethics and elimate change. In Arguments for a Better World: Essays in Honor of Amartya Sen: Volume II: Society, Institutions, and Development, ed. Basu, K. and Kanbur, R., 365–386. Oxford: Oxford University Press.Google Scholar
Dorfman, R. 1982. Comment. In Discounting for Time and Risk in Energy Policy, ed. Lind, R. C., 354–358. Washington, DC: Resources for the Future.Google Scholar
Flanigan, T. n.d. On discount rates in the cost-benefit analysis of climate change. URL: <http://scholar.harvard.edu/files/eflanigan/files/discounting.pdf>. Accessed August 2016..+Accessed+August+2016.>Google Scholar
Foley, D., Rezai, A. and Taylor, L.. 2013. The social cost of carbon emissions: seven propositions. Economics Letters 121: 90–97.Google Scholar
Gollier, C. and Hammitt, J. K.. 2014. The long-run discount rate controversy. Annual Review of Resource Economics 6: 273–295.Google Scholar
Greaves, H. Forthcoming. Discounting for climate change: a critical survey. Economics and Philosophy.Google Scholar
Kaplow, L. and Weisbach, D.. 2011. Discount rates, social judgments, individuals’ risk preferences, and uncertainty. Journal of Risk and Uncertainty 42: 125–143.CrossRefGoogle Scholar
Kelleher, J. P. Forthcoming. Descriptive versus prescriptive discounting in climate change policy analysis. Georgetown Journal of Law & Public Policy.Google Scholar
Kolstad, C., Urama, K., Broome, J. et al. 2014. Social, economic and ethical concepts and methods. In Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, ed. Edenhofer, O., Pichs-Madruga, R., Sokona, Y. et al., 207–282. Cambridge: Cambridge University Press.Google Scholar
Koopmans, T. C. 1965. On the concept of optimal economic growth. In The Econometric Approach to Development Planning. North-Holland Publ. Co. and Rand McNally (a reissue of Pontificiae Academiae Scientiarum Scripta Varia, 28: 225–300).Google Scholar
de La Grandville, O. 2009. Economic Growth: A Unified Approach. Cambridge: Cambridge University Press.Google Scholar
Lind, R. C. 1982. A primer on the major issues relating to the discount rate for evaluating national energy options: In Discounting for Time and Risk in Energy Policy, ed. Lind, R. C., 21–94. Washington, DC: Resources for the Future.Google Scholar
Moellendorf, D. 2014. The Moral Challenge of Dangerous Climate Change. Cambridge: Cambridge University Press.Google Scholar
Nordhaus, W. D. 2007. A review of the Stern Review on the Economics of Climate Change. Journal of Economic Literature XLV: 686–702.Google Scholar
Nordhaus, W. D. 2013. The Climate Casino: Risk, Uncertainty, and Economics for a Warming World. New Haven, CT: Yale University Press.Google Scholar
Quiggin, J. 2009. Stern and his critics on discounting and climate change: an editorial essay. Climatic Change 89: 195–205.Google Scholar
Ramsey, P. 1928. A mathematical theory of saving. The Economic Journal 38: 543–559.Google Scholar
Rawls, J. 1971. A Theory of Justice. Cambridge, MA: Belknap Press of Harvard University Press.Google Scholar
Rawls, J. 1999. A Theory of Justice (revised edition). Cambridge, MA: Belknap Press of Harvard University Press.Google Scholar
Roser, D. 2009. The discount rate: a small number with a big impact. In Applied Ethics: Life, Environment and Society, ed. Center for Applied Ethics and Philosophy, 12–27. Sapporo: The Center for Applied Ethics and Philosophy, Hokkaido University.Google Scholar
Scheffler, S. 1994. The Rejection of Consequentialism (revised edition). Oxford: Oxford University Press.Google Scholar
Schelling, T. 1995. Intergenerational discounting. Energy Policy 23 (4/5): 395–401.Google Scholar
Sen, A. 1977. On weights and measures: informational constraints in social welfare analysis. Econometrica 45 (7): 1539–1572.Google Scholar
Sen, A. 1982. Approaches to the choice of discount rates for social benefit-cost analysis. In Discounting for Time and Risk in Energy Policy, ed. Lind, R. C., 325–353. Washington, DC: Resources for the Future.Google Scholar
Stern, N. 1977. The marginal valuation of income. In Proceedings of the Association of University Teachers of Economics, Edinburgh Meeting of April 1976, ed. Artis, M. J. and Nobay, A. R., 209–258. Oxford: Basil Blackwell.Google Scholar
Stern, N. 2007. The Economics of Climate Change: The Stern Review. New York, NY: Cambridge University Press.Google Scholar
Stern, N. 2010. The economics of climate change. In Climate Ethics: Essential Readings, ed. Gardiner, S., Caney, S., Jamieson, D. and Shue, H., 39–76. Oxford: Oxford University Press.Google Scholar
Woollard, F. 2012. Have we solved the non-identity problem? Ethical Theory and Moral Practice 15 (5): 677–690.Google Scholar