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Individual and Social optimality of Intergenerational Investments

Author

Listed:
  • Emilio Padilla Rosa

    (Universidad Autonóma de Barcelona)

  • Joan Pasqual Rocabert

    (Universidad Autónoma de Barcelona)

Abstract

Conventional evaluation methods, as the net present value, consider any future consumption applying the time preference of present individuals. A more coherent analysis requires distinguishing between time preferences and the preferences about the consumption to be enjoyed by the individuals of future generations. In this paper we use an overlapping generations model with intergenerational altruism for studying optimality conditions of intergenerational investments. This tool allows us to consider the problem of intergenerational allocation without obviating the individuals’ intertemporal allocation of consumption.

Suggested Citation

  • Emilio Padilla Rosa & Joan Pasqual Rocabert, 2005. "Individual and Social optimality of Intergenerational Investments," Hacienda Pública Española / Review of Public Economics, IEF, vol. 174(3), pages 9-24, September.
    • Handle: RePEc:hpe:journl:y:2005:v:174:i:3:p:9-24
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Cost-benefit analysis; Future generations; Intergenerational altruism; Net present value; Project appraisal; Time discounting;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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