Dynamic public good provision under time preference heterogeneity: theory and applications to philanthropy
Philip Trammell (Global Priorities Institute and Department of Economics, University of Oxford)
GPI Working Paper No. 9-2021
I explore the implications of time preference heterogeneity for public good funding. I find that the assumption of a common discount rate is knife-edge: allowing for time preference heterogeneity produces substantially different funding behavior in equilibrium. In particular I find that, across a variety of circumstances, patient funders invest, rather than spend, the entirety of their resources for substantial lengths of time in equilibrium. I also find that the implications of this departure from the common-discount-rate case are economically significant, in that the patient payoff to spending in equilibrium, relative to that of spending according to an intermediate time preference rate, can grow arbitrarily large as a patient funder’s share of initial funding goes to zero. Finally, I discuss applications of these results to the timing of philanthropic spending, and to patient philanthropists’ willingness to pay to avoid legal disbursement minima.
Other working papers
The unexpected value of the future – Hayden Wilkinson (Global Priorities Institute, University of Oxford)
Various philosophers accept moral views that are impartial, additive, and risk-neutral with respect to betterness. But, if that risk neutrality is spelt out according to expected value theory alone, such views face a dire reductio ad absurdum. If the expected sum of value in humanity’s future is undefined—if, e.g., the probability distribution over possible values of the future resembles the Pasadena game, or a Cauchy distribution—then those views say that no real-world option is ever better than any other. And, as I argue…
Choosing the future: Markets, ethics and rapprochement in social discounting – Antony Millner (University of California, Santa Barbara) and Geoffrey Heal (Columbia University)
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. …
Welfare and felt duration – Andreas Mogensen (Global Priorities Institute, University of Oxford)
How should we understand the duration of a pleasant or unpleasant sensation, insofar as its duration modulates how good or bad the experience is overall? Given that we seem able to distinguish between subjective and objective duration and that how well or badly someone’s life goes is naturally thought of as something to be assessed from her own perspective, it seems intuitive that it is subjective duration that modulates how good or bad an experience is from the perspective of an individual’s welfare. …