Discounting while treating generations equally

This chapter asks whether equal treatment of generations is compatible with social discounting. It presents the rank-discounted utilitarian criterion, proposed by Stéphane Zuber and analyzed in Zuber and Asheim (2010), which combines equal treatment with social discounting by giving priority for the worse off not only due to their absolute level of well-being but also their relative rank in well-being. If the future is better off than the present, then this criterion is behaviorally indistinguishable from discounted utilitarianism, which is the criterion usually employed by economists. However, if e.g. climate change breaks the correlation between time and well-being, then rank-discounted utilitarianism more than discounted utilitarianism calls for present action to protect the interests of future generations. ∗This chapter is part of the research activities at the center of Equality, Social Organization, and Performance (ESOP) at the Department of Economics at the University of Oslo. ESOP is supported by the Research Council of Norway. It is prepared for inclusion in a volume to be published by Oxford University Press in honor of Thomas C. Schelling. I am grateful to Wolfgang Buchholz, Partha Dasgupta, Olav Gjelsvik, Robert Hahn, B̊ard Harstad, Adam Swift, Bertil Tungodden, Stéphane Zuber, seminar participants at the Oxford Martin School as well as an anonymous referee for helpful comments. Address: Department of Economics, University of Oslo, P.O. Box 1095 Blindern, NO-0317 Oslo, Norway. Tel: +47 22855498 Fax: +47 22855035 Email: [email protected]