Choosing the future: Markets, ethics and rapprochement in social discounting
Antony Millner (University of California, Santa Barbara and National Bureau of Economic Research) and Geoffrey Heal (Columbia University and National Bureau of Economic Research)
GPI Working Paper No. 13-2021, published in Journal of Economics Literature
This paper provides a critical review of the literature on choosing social discount rates (SDRs) for public cost-benefit analysis. We discuss two dominant approaches, the first based on market prices, and the second based on intertemporal ethics. While both methods have attractive features, neither is immune to criticism. The market-based approach is not entirely persuasive even if markets are perfect, and faces further headwinds once the implications of market imperfections are recognised. By contrast, the ‘ethical’ approach – which relates SDRs to marginal rates of substitution implicit in a single planner’s intertemporal welfare function – does not rely exclusively on markets, but raises difficult questions about what that welfare function should be. There is considerable disagreement on this matter, which translates into enormous variation in the evaluation of long-run payoffs. We discuss the origins of these disagreements, and suggest that they are difficult to resolve unequivocally. This leads us to propose a third approach that recognises the immutable nature of some normative disagreements, and proposes methods for aggregating diverse theories of intertemporal social welfare. We illustrate the application of these methods to social discounting, and suggest that they may help us to move beyond long-standing debates that have bedevilled this field.
Other working papers
Imperfect Recall and AI Delegation – Eric Olav Chen (Global Priorities Institute, University of Oxford), Alexis Ghersengorin (Global Priorities Institute, University of Oxford) and Sami Petersen (Department of Economics, University of Oxford)
A principal wants to deploy an artificial intelligence (AI) system to perform some task. But the AI may be misaligned and aim to pursue a conflicting objective. The principal cannot restrict its options or deliver punishments. Instead, the principal is endowed with the ability to impose imperfect recall on the agent. The principal can then simulate the task and obscure whether it is real or part of a test. This allows the principal to screen misaligned AIs during testing and discipline their behaviour in deployment. By increasing the…
Philosophical considerations relevant to valuing continued human survival: Conceptual Analysis, Population Axiology, and Decision Theory – Andreas Mogensen (Global Priorities Institute, University of Oxford)
Many think that human extinction would be a catastrophic tragedy, and that we ought to do more to reduce extinction risk. There is less agreement on exactly why. If some catastrophe were to kill everyone, that would obviously be horrific. Still, many think the deaths of billions of people don’t exhaust what would be so terrible about extinction. After all, we can be confident that billions of people are going to die – many horribly and before their time – if humanity does not go extinct. …
Longtermist political philosophy: An agenda for future research – Jacob Barrett (Global Priorities Institute, University of Oxford) and Andreas T. Schmidt (University of Groningen)
We set out longtermist political philosophy as a research field. First, we argue that the standard case for longtermism is more robust when applied to institutions than to individual action. This motivates “institutional longtermism”: when building or shaping institutions, positively affecting the value of the long-term future is a key moral priority. Second, we briefly distinguish approaches to pursuing longtermist institutional reform along two dimensions: such approaches may be more targeted or more broad, and more urgent or more patient.