IF lecture 4

The concept that the timing of someone's existence shouldn't affect the value of their happiness from a universal standpoint.

The principle that future generations deserve our concern just as much as individuals living today, considering the potential impact of our actions on them.

The process of reducing the value of future benefits or costs compared to present ones.

The idea that discounting future benefits or costs is ethically wrong because it undermines fairness across generations, arising from our limited ability to imagine the future.

The argument against discounting suggests that if we can't predict the future perfectly, we should not discount it, as future generations might be more important than the present.

The argument that discounting is necessary for economic decision-making, even though it's ethically questionable.

A scenario where economic output consists of perishable goods only, meaning that investment is impossible because any gains cannot be saved.

The idea that discounting in economic models is used not only for practical reasons but also for ethical reasons.

The rate at which we value benefits and losses at different points in time. It reflects our preference for present over future outcomes.

A model used to represent how much value we place on future consumption compared to present consumption. It involves a parameter for discounting and a parameter for inequality aversion.

The rate at which consumption grows over time. It influences the weight given to future generations in the decision-making process.

The parameter in the discounted utilitarian criterion that captures our preference for present over future benefits. It reflects our impatience or desire for immediate gratification.

The parameter in the discounted utilitarian criterion that reflects how much we dislike inequality in consumption across time. It measures our concern for fairness between generations.

The formula that links the Social Discount Rate (SDR) to the discount rate (δ), the inequality aversion (η), and the growth rate of consumption (g). It helps us understand how these factors influence our future-oriented decisions.

A significant area of debate in intergenerational fairness, focusing on the selection of appropriate values for the discount rate (δ) and the inequality aversion (η).

The ongoing discussion about the validity, applicability, and limitations of the exponentially discounted utilitarian criterion and the Ramsey rule in the context of intergenerational fairness.

The idea that without a preference for immediate consumption (impatience), individuals would always prefer to save more, even if it means sacrificing current consumption.

A situation where individuals are willing to sacrifice some current consumption to invest in a project that yields a perpetual stream of benefits for future generations.

The rate at which future consumption is valued relative to present consumption. A lower discount rate suggests that future generations' well-being is valued more highly.

A preference ordering that ranks infinite consumption streams based on their desirability. A higher-ranked stream is preferred.

A preference ordering that is sensitive to changes in consumption at any point in time, meaning even a small increase in consumption at any point would result in a higher ranking.

A preference ordering that is continuous, meaning small changes in consumption streams should lead to small changes in the ranking, ensuring smoothness in the ordering.

The idea that if a preference ordering is both continuous and sensitive (as Koopmans argues), then individuals must exhibit some degree of impatience.

Arrow's conclusion based on Koopmans' argument that discounting is necessary for making ethical and consistent choices between generations.

A model of individual behavior that suggests people value immediate rewards more highly than future rewards, leading to declining discount rates over time.

A situation where individuals are indifferent between receiving a smaller amount immediately and a larger amount at a later date, demonstrating their diminishing discount rate over time.

The observation that individuals value immediate gratification more than future rewards, leading to steeply declining discount rates over time.

The process of determining the current value of a future benefit, based on its perceived value at a specific point in time.

The evaluation of the benefits and drawbacks of a particular choice, taking into account the time value of money.

The assumption that future generations will have access to resources and technologies that are not currently available, leading to a lower discount rate.

A concept that says if one consumption plan is better than another today, it should still be better in the future, even as time passes.

An issue that arises when a decision made today about future events might not be consistent with future preferences when those events actually occur.

Social welfare that takes into account both discounting and inequality.

The idea that social attitudes towards discounting (valuing present over future) can be considered separately from attitudes towards inequality (fairness between individuals).

A framework that distinguishes between how we value future generations (discounting) and how we address fairness between individuals (inequality).

This theory highlights that views on discounting and inequality can be selected independently, leading to more options and clarity in dealing with intergenerational issues.

Measures how much we value future well-being, factoring in both the time it occurs and the level of inequality it affects.

A function that aggregates consumption streams over time, accounting for both the social welfare function and time discounting.

A mathematical function that reflects our preference for present benefits over future benefits. It captures the idea that a benefit received today is worth more than the same benefit received in the future.

A way to convert consumption streams across different points in time into equivalent values, enabling fair comparisons of social welfare across generations.

A social welfare function that assumes the value of a society's welfare is simply the sum of the individual welfare of each member.

A social welfare function that weights the welfare of individuals based on their position in the distribution of welfare, giving more weight to those with lower welfare.

A social welfare function that is not defined by a simple sum or weighted sum of individual welfares but instead considers the entire distribution of welfare and its impact on social well-being.