Working Paper: NBER ID: w22524
Authors: Antony Millner; Geoffrey Heal
Abstract: Recent work on collective intertemporal choice suggests that non-dictatorial social preferences are generically time inconsistent. We argue that this claim conflates time consistency with two distinct properties of preferences: stationarity and time invariance. While the conjunction of time invariance and stationarity implies time consistency, the converse does not hold. Although social preferences cannot be stationary, they may be time consistent if time invariance is abandoned. If individuals are discounted utilitarians, revealed preference provides no guidance on whether social preferences should be time consistent or time invariant. Nevertheless, we argue that time invariant social preferences are often normatively and descriptively problematic.
Keywords: collective decisions; intertemporal choice; time consistency
JEL Codes: D60; D71; D90
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| abandonment of time invariance (C22) | possibility of time consistency in social preferences (D15) |
| lack of guidance (D80) | normative and descriptive evaluation of social preferences (D63) |
| heterogeneous time preferences (D15) | time consistent allocation (D15) |