IDEAS home Printed from https://ideas.repec.org/p/cor/louvco/2012059.html
   My bibliography  Save this paper

Equity and efficiency in an overlapping generation model

Author

Listed:
  • ISAAC, Tanguy

    (Université catholique de Louvain, CORE, Belgium)

  • PIACQUADIO, Paolo Giovanni

    (Université catholique de Louvain, CORE, Belgium; Aix-Marseille University, AMSE, France)

Abstract

The paper addresses intergenerational and intragenerational equity in an overlapping generation economy. We aim at defining an egalitarian distribution of a constant stream of resources, when preferences are ordinal and non-comparable. We establish the impossibility of efficiently distributing resources while treating equally agents with same preferences that belong to possibly different generations. We thus propose an egalitarian criterion based on the equal-split guarantee: this requires all agents to find their assigned consumption bundle at least as desirable as the equal division of resources. Finally, we show how to construct a cardinalization of the preferences that enables well-being comparisons: this allows defining the family of critical-level utilitarian orderings that top-rank the egalitarian solution.

Suggested Citation

  • ISAAC, Tanguy & PIACQUADIO, Paolo Giovanni, 2012. "Equity and efficiency in an overlapping generation model," LIDAM Discussion Papers CORE 2012059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2012059
    as

    Download full text from publisher

    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp2012.html
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521715348, September.
    2. Geir B. Asheim, 2010. "Intergenerational Equity," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 197-222, September.
    3. John Quiggin, 2012. "Equity Between Overlapping Generations," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(2), pages 273-283, March.
    4. Moulin, Herve & Thomson, William, 1988. "Can everyone benefit from growth? : Two difficulties," Journal of Mathematical Economics, Elsevier, vol. 17(4), pages 339-345, September.
    5. Thomson, William, 2011. "Chapter Twenty-One - Fair Allocation Rules," Handbook of Social Choice and Welfare, in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 2, chapter 21, pages 393-506, Elsevier.
    6. Thomson, W, 1987. "Individual and Collective Opportunities," International Journal of Game Theory, Springer;Game Theory Society, vol. 16(4), pages 245-252.
    7. Geir Asheim & Walter Bossert & Yves Sprumont & Kotaro Suzumura, 2010. "Infinite-horizon choice functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(1), pages 1-21, April.
    8. Yves Sprumont, 1998. "Equal factor equivalence in economies with multiple public goods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 15(4), pages 543-558.
    9. David Cass & Menahem E. Yaari, 1966. "A Re-examination of the Pure Consumption Loans Model," Journal of Political Economy, University of Chicago Press, vol. 74(4), pages 353-353.
    10. K. J. Arrow & A. K. Sen & K. Suzumura (ed.), 2011. "Handbook of Social Choice and Welfare," Handbook of Social Choice and Welfare, Elsevier, edition 1, volume 2, number 2.
    11. Piacquadio, Paolo G., 2014. "Intergenerational egalitarianism," Journal of Economic Theory, Elsevier, vol. 153(C), pages 117-127.
    12. Moulin, Herve, 1991. "Welfare bounds in the fair division problem," Journal of Economic Theory, Elsevier, vol. 54(2), pages 321-337, August.
    13. William Thomson, 1983. "The Fair Division of a Fixed Supply Among a Growing Population," Mathematics of Operations Research, INFORMS, vol. 8(3), pages 319-326, August.
    14. Tomoichi Shinotsuka & Koichi Suga & Kotaro Suzumura & Koichi Tadenuma, 2007. "Equity and Efficiency in Overlapping Generations Economies," International Economic Association Series, in: John Roemer & Kotaro Suzumura (ed.), Intergenerational Equity and Sustainability, chapter 2, pages 20-35, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Piacquadio, Paolo G., 2020. "The ethics of intergenerational risk," Journal of Economic Theory, Elsevier, vol. 186(C).
    2. Emeline Bezin, 2019. "The economics of Green consumption, cultural transmission and sustainable technological change," PSE-Ecole d'économie de Paris (Postprint) halshs-02087970, HAL.
    3. Piacquadio, Paolo G., 2014. "Intergenerational egalitarianism," Journal of Economic Theory, Elsevier, vol. 153(C), pages 117-127.
    4. Emeline Bezin, 2019. "The economics of Green consumption, cultural transmission and sustainable technological change," Post-Print halshs-02087970, HAL.
    5. Bezin, Emeline, 2019. "The economics of green consumption, cultural transmission and sustainable technological change," Journal of Economic Theory, Elsevier, vol. 181(C), pages 497-546.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Piacquadio, Paolo G., 2020. "The ethics of intergenerational risk," Journal of Economic Theory, Elsevier, vol. 186(C).
    2. Piacquadio, Paolo G., 2014. "Intergenerational egalitarianism," Journal of Economic Theory, Elsevier, vol. 153(C), pages 117-127.
    3. Moreno-Ternero, Juan D. & Roemer, John E., 2012. "A common ground for resource and welfare egalitarianism," Games and Economic Behavior, Elsevier, vol. 75(2), pages 832-841.
    4. Kranich, Laurence, 2020. "Resource-envy-free and efficient allocations: A new solution for production economies with dedicated factors," Journal of Mathematical Economics, Elsevier, vol. 89(C), pages 1-7.
    5. Moreno-Ternero, Juan D. & Roemer, John E., 2012. "A common ground for resource and welfare egalitarianism," Games and Economic Behavior, Elsevier, vol. 75(2), pages 832-841.
    6. Bergantiños, Gustavo & Moreno-Ternero, Juan D., 2022. "Monotonicity in sharing the revenues from broadcasting sports leagues," European Journal of Operational Research, Elsevier, vol. 297(1), pages 338-346.
    7. Fleurbaey, Marc & Maniquet, François, 2017. "Fairness and well-being measurement," Mathematical Social Sciences, Elsevier, vol. 90(C), pages 119-126.
    8. Hougaard, Jens Leth & Moreno-Ternero, Juan D. & Østerdal, Lars Peter, 2012. "A unifying framework for the problem of adjudicating conflicting claims," Journal of Mathematical Economics, Elsevier, vol. 48(2), pages 107-114.
    9. Susumu Cato & Adrien Lutz, 2018. "Kenneth Arrow, moral obligations, and public policies," Working Papers halshs-01973898, HAL.
    10. Harless, Patrick, 2016. "Solidarity in preference aggregation: Improving on a status quo," Games and Economic Behavior, Elsevier, vol. 95(C), pages 73-87.
    11. Marcus Berliant & Karl Dunz & William Thomson, 2000. "On the Fairness Literature: Comment," Southern Economic Journal, John Wiley & Sons, vol. 67(2), pages 479-484, October.
    12. François Maniquet, 2017. "De chacun selon ses capacités à chacun selon ses besoins, ou (même) plus, s’il le souhaite," Revue économique, Presses de Sciences-Po, vol. 68(1), pages 119-129.
    13. John A. Weymark, 2017. "Conundrums for nonconsequentialists," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(2), pages 269-294, February.
    14. Biung†Ghi Ju & Juan D. Moreno†Ternero, 2017. "Fair Allocation Of Disputed Properties," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(4), pages 1279-1301, November.
    15. Sylvain Ferrières, 2017. "Nullified equal loss property and equal division values," Theory and Decision, Springer, vol. 83(3), pages 385-406, October.
    16. Marc Fleurbaey, 2012. "Economics is not what you think: A defense of the economic approach to taxation," Working Papers halshs-00698575, HAL.
    17. Stern, Nicholas, 2014. "Ethics, equity and the economics of climate change paper 2: economics and politics," LSE Research Online Documents on Economics 62704, London School of Economics and Political Science, LSE Library.
    18. Erlanson, Albin & Flores-Szwagrzak, Karol, 2015. "Strategy-proof assignment of multiple resources," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 137-162.
    19. Chambers, Christopher P. & Moreno-Ternero, Juan D., 2021. "Bilateral redistribution," Journal of Mathematical Economics, Elsevier, vol. 96(C).
    20. M. Ali Khan & Metin Uyanık, 2021. "Topological connectedness and behavioral assumptions on preferences: a two-way relationship," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(2), pages 411-460, March.

    More about this item

    Keywords

    intergenerational equity; intragenerational equity; overlapping generation model; no-envy; equal-split guarantee; allocation rules; utilitarian welfare function;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2012059. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alain GILLIS (email available below). General contact details of provider: https://edirc.repec.org/data/coreebe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.