Nondogmatic Social Discounting

Abstract

The long-run social discount rate has an enormous effect on the value of climate mitigation, infrastructure projects, and other long-term public policies. Its value is however highly contested, in part because of normative disagreements about social time preferences. I develop a theory of “nondogmatic” social planners, who are insecure in their current normative judgments and entertain the possibility that they may change. Although each nondogmatic planner advocates an idiosyncratic theory of intertemporal social welfare, all such planners agree on the long-run social discount rate. Nondogmatism thus goes some way toward resolving normative disagreements, especially for long-term public projects. (JEL D61, H43)

The Future, Now: A Review of Social Discounting

“…Over the last two decades, there has been a general shift towards using lower SDRs under both of these two approaches. This has been motivated by a range of new theory and empirical evidence (e.g., Weitzman 1998, Newell and Pizer 2003, Millner 2020, Lemoine 2021, lower market interest rates (Giglio et al 2015, Bauer and Rudebusch 2020, and expert recommendations using both normative and positive considerations (Drupp et al 2018). These lower SDRs contribute to more weight being placed on future well-being in the appraisal of public policy, programmes and projects.…”

Cross-Dynastic Intergenerational Altruism

“…Cross-dynastic intergenerational altruism implies a system of benevolent utility functions (Pearce, 1983;Bergstrom, 1999). Recent additions to the literature focus on static interdependent utility (Bourlès et al, 2017), as well as dynamic interdependent utility without considering saving behavior (Millner, 2019). My paper clarifies consequences in terms of saving.…”

Temptation and self‐control for the impure benevolent planner: The case of heterogeneous discounting

“…Another possible direction to escape from the dictatorship result is to allow multiple discount factors, either by weakening the completeness axiom at a social level or by allowing a maxmin-type representation for the social objective function (Chambers & Echenique, 2018, 2020.…”

“…Giving up or weakening stationary/exponential/geometric discounting at the social level allows us to maintain efficiency. Millner and Heal (2018), Millner (2020) propose time‐dependent social welfare function with nonstationary discounting. It is debatable if the planner can commit to the maximization solution for such a nonstationary objective function.…”