Discounting and intergenerational equity
Name:
Geir Asheim
Title, organisation:
Professor, University of Oslo
E-mail/phone:
g.b.asheim@econ.uio.no, + 47 22 85 54 98
Summary:
Is social discounting compatible with treating generations equally? Rank-discounted utilitarianism (RDU) treats generations
equally, by discounting utilities according to rank and not according to time.
Discounting becomes a mere expression of intergenerational inequality aversion. RDU is behaviourally indistinguishable from
time-discounted utilitarianism when well-being is correlated with time. In this case, future's higher wellbeing is discounted for
two reasons: (i) at a higher level, its wellbeing contributes less to utility, and (ii) being better off, its utility is assigned less
weight. However, RDU leads to different conclusions if climate change undermines future wellbeing.
Application of RDU for evaluating climate policies requires extensions to intratemporal inequality, variable population and
uncertainty, and I indicate how this can be done. I conclude by discussing the relevance of RDU for single-country decision
making.
Biography:
Geir Asheim is professor of economics at the department of economics, University of Oslo. He holds a doctor of philosophy
degree in economics at the university of California, Santa Barbara. He is/has been a visiting scholar or professor at l`Institut
d`etudes avancees (Paris), University of California, Cornell University, Stanford, Harvard, amongst others. His academic
interests are game theory, intergenerational justice, green national accounting, amongst others.
Suggested
readings:
Asheim, G.B. (2012) Discounting while treating generations equally. In Climate Change and Common Sense: Essays in
Honour of Tom Schelling (R.W.Hahn, A. Ulph, Eds.) Oxford UP.
Asheim, G.B., Mitra, T. (2010), Sustainability and discounted utilitarianism in models of economic growth, Mathematical
Social Sciences 59, 148–169;
http://folk.uio.no/gasheim/AM-MSS10.pdf
Asheim, G.B., Mitra, T., Tungodden, B. (2012), Sustainable recursive social welfare functions, Economic Theory 49, 267–
292;
Dietz, S., Asheim, G.B. (2012), Climate policy under sustainable discounted utilitarianism, Journal of Environmental
Economics and Management 63, 321–335
Zuber, S., Asheim, G.B. (forthcoming), Justifying social discounting: the rank-discounted utilitarian approach, Journal of
Economic Theory.