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Questions and Answers

What theoretical framework did Millner and Heal explore in their 2018 publication?

The economics of climate change

Multi-profile social choice theory

Equity among generations

Intertemporal choice with a focus on time inconsistency (correct)

Which publication addresses the ethical implications of intergenerational risk?

The ethics of intergenerational risk (correct)

Increasing risk: I. A definition

The Economics of Climate Change

A fairness justification of utilitarianism

Whose work involves a review of the Stern Review on Climate Change?

Millner and Heal

Okun

Prelec

Nordhaus (correct)

What type of discounting does Prelec discuss in relation to time preference?

Hyperbolic discounting Signup and view all the answers

Which author's work includes a survey on intergenerational equity and infinite-population ethics?

Pivato and Fleurbaey Signup and view all the answers

Which of the following is identified as a significant trade-off according to Okun's work?

Equality vs. efficiency Signup and view all the answers

What concept is central to the work of Ramsey from 1928?

Mathematical theory of saving Signup and view all the answers

Which research addresses climate policy agreement between philosophers and economists?

Philosophers and economists agree on climate policy paths Signup and view all the answers

What does the principle of social indifference imply about consumption?

Consumption intervals represent equal value regardless of individual consumption patterns. Signup and view all the answers

What does the axiom regarding partition independence state?

The specific consumption stream does not affect the valuation of intervals. Signup and view all the answers

How does exponential discounting value certain periods of time?

Next 38 years are valued equally to the next 62 years. Signup and view all the answers

What is the primary contention regarding discount rates in intergenerational justice?

There is ongoing debate about the appropriateness of these rates. Signup and view all the answers

What is the formula for the social discount rate according to the context provided?

SDRea = ⇢ + ⌘gt Signup and view all the answers

The concavity of the utility function may reflect which two attitudes?

Inequality aversion and intertemporal elasticity of substitution. Signup and view all the answers

What is a key difference between earlier and later generations in the context of climate change policies?

Earlier generations face costs while later generations gain benefits. Signup and view all the answers

What does the variable ⌘ represent in the context of the Atkinson aggregator function?

The aversion to consumption-level inequality Signup and view all the answers

What does the literature typically rely on regarding inequality aversion?

Ad hoc formulations and sensitivity analysis. Signup and view all the answers

What do intergenerational discounting and intergenerational inequality represent?

Attitudes towards costs and benefits across time and among generations. Signup and view all the answers

In the expression for the social welfare functions, what does the function g represent?

Aversion to rank inequality Signup and view all the answers

Which statement correctly describes the relationship between the functions f and g in the context provided?

Function f can be expressed as the identity function when rank-weighting is considered. Signup and view all the answers

How does the new approach to inequality attitudes aim to enhance economic theories?

By incorporating preferences for consumption smoothing over time. Signup and view all the answers

What is the significance of the orthogonality property in the context of intergenerational justice theories?

It allows for the independent consideration of discounting and inequality. Signup and view all the answers

What is the role of the parameter β in the exponentially-discounted rank-dependent social welfare functions?

It measures rank inequality aversion. Signup and view all the answers

What has been clarified regarding social welfare functions in the results?

There are numerous insightful functions that are manageable and relevant. Signup and view all the answers

Which of the following is NOT mentioned as a component of intergenerational justice theories?

Assessment of direct resource allocation. Signup and view all the answers

Which term describes the approach that separates discounting and inequality attitudes within intergenerational justice?

Modular characterization. Signup and view all the answers

Which form does the social welfare function take when aversion to rank inequality is constant?

Additive criteria emerge. Signup and view all the answers

What is hyperbolic discounting in the context of social impatience?

A non-constant rate that prioritizes immediate over future benefits. Signup and view all the answers

What does the notation $W = rd$ represent in the context provided?

Rank-dependent social welfare Signup and view all the answers

What does the average growth in consumption, denoted as gct, signify in the discussions of social discount rates?

The growth rate of consumption between time 0 and time t Signup and view all the answers

Which of the following approaches is highlighted as a limitation in existing theories of intergenerational justice?

A confounding of discounting and inequality attitudes. Signup and view all the answers

What is an implication of separating discounting and inequality attitudes in intergenerational justice theories?

It allows for a broader range of ethical viewpoints. Signup and view all the answers

What condition must be satisfied for a social welfare function W to be considered Paretian?

For each pair of consumption streams, one must be strictly greater in all periods. Signup and view all the answers

What does the Pigou-Dalton transfer principle state?

Progressive transfers are welfare improving if they reduce inequality. Signup and view all the answers

Under what condition does a social welfare function W exhibit inequality aversion?

If W shows indifference to changes in the order of constant consumption. Signup and view all the answers

How does time discounting affect the social welfare function W?

It allows the function to remain indifferent to permutation of consumption allocations. Signup and view all the answers

What is necessary for V(y) to be greater than V(y') in the context of first-order stochastic dominance?

There must be some range where y has higher density than y'. Signup and view all the answers

Which aspect does the proposed axiom of inequality aversion focus on?

Increasing social welfare through progressive transfers. Signup and view all the answers

What characterizes a social welfare function W as modular?

It integrates individual utilities independently when constructing social welfare. Signup and view all the answers

What is implied if the social welfare function W shows indifference to permutation?

Consumption can be distributed without affecting perceived welfare. Signup and view all the answers

What is the main purpose of transforming consumption streams into equivalent time?

To express all consumption with the same social value. Signup and view all the answers

How does the modular theory relate to time-discounting functions?

It is described by a time-discounting function and an aggregator function. Signup and view all the answers

What valuable insight do theories of intergenerational justice provide for policy applications?

They allow for comparisons of discounting and inequality attitudes across social welfare functions. Signup and view all the answers

What is meant by the expression 'social impatience' in this context?

The tendency to prioritize present consumption over future consumption. Signup and view all the answers

What does the decomposition of social welfare into efficiency and equality components signify?

It establishes a clear measurement of both economic efficiency and individual fairness. Signup and view all the answers

What is the significance of the 'Ramsey rule' in the context of this discussion?

It describes the value of consumption at different points in time. Signup and view all the answers

What does the novel axiom of nested time split imply in terms of calendar time?

Calendar time can be divided into equally valuable sub-intervals. Signup and view all the answers

Which of the following best describes how inequality is addressed in this context?

Inequality attitudes are compared across various discounting frameworks. Signup and view all the answers

Study Notes

Intergenerational Discounting and Inequality

This study examines theories of justice concerning intergenerational discounting and inequality.
Each social welfare function is defined by a time-discounting function (reflecting attitudes towards time) and an aggregator function (reflecting attitudes towards inequality).
Different choices of these functions allow for diverse welfare criteria, including common criteria in the literature as special cases.
The study aims to characterize and understand the limits of disentangling discounting and inequality in intergenerational justice.
Key terms include: intergenerational justice, discounting, and inequality.

Introduction

Policies today affect future generations, sometimes with benefits for some and costs for others.
Key considerations in intergenerational justice are attitudes towards earlier vs. later generations (discounting) and attitudes toward the well-being of different generations (inequality).
The study argues that discounting and inequality are independent aspects of intergenerational justice.
The paper develops a new family of intergenerational justice theories.

Welfare, Calendar Time, and Equivalent Time

Calendar time (t) is continuous and spans [0, ∞).
A consumption stream (c) is a function mapping calendar time to positive real numbers (R+).
A social welfare function (W) ranks different consumption streams.
Equivalent time (i) is created by a transformation function (w). This transformation adjusts calendar time based on time discounting.
An aggregator function (V) assesses social welfare with equivalent time.

The Time-Discounting Module

Time-discounting function (w) must be continuous, strictly increasing, and satisfy w(0) = 0 and w(∞) = 1.
The function captures social preferences for earlier vs. later generations.
The function ω(t) measures the social value of consumption at time t.
Exponential and quasi-hyperbolic functions are common in literature.

The Aggregation Module

The aggregator function (V) measures social welfare in equivalent time, given a social welfare function (W) and a time-discounting function (w).
The function is normalized, and all consumption streams can be ordered by this function with no further explicit assumptions.
A social welfare function is “Paretian” if when a consumption stream has higher or equal consumption across all points in time, it is deemed a higher social welfare function.
Social welfare functions that satisfy Pareto efficiency are commonly used.

Combines discounting and inequality aversion modules in theories of intergenerational justice.
The paper presents different classes of theories and their general properties.
The goal is to show their correspondence to the common ethical consideration to intergenerational justice.

Characterization and Uniqueness

The study characterizes the family of modular theories, highlighting existence and uniqueness aspects of the modular representation.
Examines time consistency and invariance.
Explains why the exponential discounting model in some contexts is a modular theory.

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Description

This study explores theories of intergenerational justice, focusing on discounting and inequality. It defines social welfare functions through time-discounting and aggregator functions while examining the implications for future generations. Understanding these dynamics is crucial for formulating equitable policies.