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
Dispelling the Anthropic Shadow – Teruji Thomas (Global Priorities Institute, University of Oxford)
There are some possible events that we could not possibly discover in our past. We could not discover an omnicidal catastrophe, an event so destructive that it permanently wiped out life on Earth. Had such a catastrophe occurred, we wouldn’t be here to find out. This space of unobservable histories has been called the anthropic shadow. Several authors claim that the anthropic shadow leads to an ‘observation selection bias’, analogous to survivorship bias, when we use the historical record to estimate catastrophic risks. …
The evidentialist’s wager – William MacAskill, Aron Vallinder (Global Priorities Institute, Oxford University) Caspar Österheld (Duke University), Carl Shulman (Future of Humanity Institute, Oxford University), Johannes Treutlein (TU Berlin)
Suppose that an altruistic and morally motivated agent who is uncertain between evidential decision theory (EDT) and causal decision theory (CDT) finds herself in a situation in which the two theories give conflicting verdicts. We argue that even if she has significantly higher credence in CDT, she should nevertheless act …
The epistemic challenge to longtermism – Christian Tarsney (Global Priorities Institute, Oxford University)
Longtermists claim that what we ought to do is mainly determined by how our actions might affect the very long-run future. A natural objection to longtermism is that these effects may be nearly impossible to predict— perhaps so close to impossible that, despite the astronomical importance of the far future, the expected value of our present actions is mainly determined by near-term considerations. This paper aims to precisify and evaluate one version of this epistemic objection to longtermism…