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Discounting and Intergenerational Ethics

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  • Zuber, Stéphane
  • Fleurbaey, Marc

Abstract

The question of social discounting is central in intertemporal cost-benefit analysis that often shapes economists’ recommendations regarding climate policy. The practice of discounting has been the object of heated debates among economists and philosophers, revolving around the issue of intergenerational ethics. In this chapter, we review the different arguments for and against specific values of social discounting. We show that there are actually two different ethical issues at stake: 1) the question of impartiality (or equal treatment of all generations); 2) the question of priority to the worse-off (aversion to inequality in resources, capabilities or welfare). These questions have emerged in the utilitarian approach and can be neatly separated in that case. They also have very different consequences for climate policy. We then argue that the question of social discounting is not confined to the utilitarian framework as it more generally describes the social value of income (or capability or welfare) transfers to future generations. Lastly, we discuss the many limitations of social discounting as a tool for policy analysis.

Suggested Citation

  • Zuber, Stéphane & Fleurbaey, Marc, 2019. "Discounting and Intergenerational Ethics," SocArXiv xjhkp_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:xjhkp_v1
    DOI: 10.31219/osf.io/xjhkp_v1
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    References listed on IDEAS

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    1. Geir B. Asheim & Tapan Mitra & Bertil Tungodden, 2016. "Sustainable Recursive Social Welfare Functions," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 165-190, Springer.
    2. Anthoff, David & Hepburn, Cameron & Tol, Richard S.J., 2009. "Equity weighting and the marginal damage costs of climate change," Ecological Economics, Elsevier, vol. 68(3), pages 836-849, January.
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    4. Matthew Adler & David Anthoff & Valentina Bosetti & Greg Garner & Klaus Keller & Nicolas Treich, 2017. "Priority for the worse-off and the social cost of carbon," Nature Climate Change, Nature, vol. 7(6), pages 443-449, June.
    5. Adler, Matthew D. & Fleurbaey, Marc (ed.), 2016. "The Oxford Handbook of Well-Being and Public Policy," OUP Catalogue, Oxford University Press, number 9780199325818.
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