The cross-sectional implications of the social discount rate
Maya Eden (Brandeis University)
GPI Working Paper No. 12-2021, published in Econometrica
How should policy discount future returns? The standard approach to this normative question is to ask how much society should care about future generations relative to people alive today. This paper establishes an alternative approach, based on the social desirability of redistributing from the current old to the current young. Along the balanced growth path, bounds on the welfare gains from age-based redistribution imply bounds on the social discount rate. A calibration shows that an objective of maximizing the sum of utilities in each period implies social discount rates that are within a percentage point of the market interest rate.
Other working papers
Intergenerational equity under catastrophic climate change – Aurélie Méjean (CNRS, Paris), Antonin Pottier (EHESS, CIRED, Paris), Stéphane Zuber (CNRS, Paris) and Marc Fleurbaey (CNRS, Paris School of Economics)
Climate change raises the issue of intergenerational equity. As climate change threatens irreversible and dangerous impacts, possibly leading to extinction, the most relevant trade-off may not be between present and future consumption, but between present consumption and the mere existence of future generations. To investigate this trade-off, we build an integrated assessment model that explicitly accounts for the risk of extinction of future generations…
Crying wolf: Warning about societal risks can be reputationally risky – Lucius Caviola (Global Priorities Institute, University of Oxford) et al.
Society relies on expert warnings about large-scale risks like pandemics and natural disasters. Across ten studies (N = 5,342), we demonstrate people’s reluctance to warn about unlikely but large-scale risks because they are concerned about being blamed for being wrong. In particular, warners anticipate that if the risk doesn’t occur, they will be perceived as overly alarmist and responsible for wasting societal resources. This phenomenon appears in the context of natural, technological, and financial risks…
AI takeover and human disempowerment – Adam Bales (Global Priorities Institute, University of Oxford)
Some take seriously the possibility of AI takeover, where AI systems seize power in a way that leads to human disempowerment. Assessing the likelihood of takeover requires answering empirical questions about the future of AI technologies and the context in which AI will operate. In many cases, philosophers are poorly placed to answer these questions. However, some prior questions are more amenable to philosophical techniques. What does it mean to speak of AI empowerment and human disempowerment? …