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
How important is the end of humanity? Lay people prioritize extinction prevention but not above all other societal issues. – Matthew Coleman (Northeastern University), Lucius Caviola (Global Priorities Institute, University of Oxford) et al.
Human extinction would mean the deaths of eight billion people and the end of humanity’s achievements, culture, and future potential. On several ethical views, extinction would be a terrible outcome. How do people think about human extinction? And how much do they prioritize preventing extinction over other societal issues? Across six empirical studies (N = 2,541; U.S. and China) we find that people consider extinction prevention a global priority and deserving of greatly increased societal resources. …
When should an effective altruist donate? – William MacAskill (Global Priorities Institute, Oxford University)
Effective altruism is the use of evidence and careful reasoning to work out how to maximize positive impact on others with a given unit of resources, and the taking of action on that basis. It’s a philosophy and a social movement that is gaining considerable steam in the philanthropic world. For example,…
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. …