Working Paper: NBER ID: w12239
Authors: Louis Kaplow
Abstract: The view that intergenerational distributive justice and efficiency should be treated separately is familiar, yet controversial. This article elaborates the often-implicit justifications for separate treatment and provides a more express statement of how and when such treatment is appropriate. Substantial attention is devoted to an approach that holds constant the intra- and intergenerational distribution of well-being, which proves to be a valuable analytical device even for intergenerational policies that are not distribution neutral. Also explored are possible interrelationships between intergenerational distributive justice and efficiency, the choice of interest rate for discounting dollars, and how the present approach relates to those that would employ direct social weights to dollars at different points in time.
Keywords: intergenerational justice; efficiency; discounting; policy analysis
JEL Codes: D31; D61; D63; D81; D99; H23; H43; K32; Q38; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| intergenerational efficiency (D15) | distributive justice (D63) |
| present decisions (D70) | future outcomes (P17) |
| discount rate (E43) | resource allocation (H61) |
| efficient policies (D78) | outcomes for all generations (J11) |
| discounting dollars at market rate (E43) | intergenerational policy decisions (D15) |
| resource allocation (H61) | efficiency (D61) |