Abstract
How do people value the welfare of future generations? This question is of special importance now that future generations’ welfare is at stake because of expected climate change. This paper looks into people’s preferences regarding intergenerational distribution of welfare. It replicates research on the discounting of life saving and uses a new question that aims to measure the valuation of future generations’ standard of life. Data is obtained from an online questionnaire (N = 138) and shows values for the discount factors that indicate decreasing valuation of future welfare. Heterogeneity is observed in distributions between one’s descendants and between future generations in general. This might be explained by the superiority of either kinship-related or ethical motives that would differ for both sorts. Obtained discount factors possibly reflect decreasing connectedness to generations over time, until the point where such generations are considered strangers and no further discounting takes place. The effect of major life events such as grandparenthood also fit this explanatory framework. Changes in demographic factors could therefore translate to changes in intergenerational discounting. Exact predictions of these and other relationships should be confirmed by further research.
Highlights
Discounting is an economic subject serving many applications
This paper finds that heterogeneity between discount factor values can be partially explained by the interplay between ethical and kinship related motives that are triggered for certain distribution decisions
Various publications on intergenerational discounting – of which Stern's (2006) is most well-known – present a normative discount factor that is based on welfare economics' ethical framework of total utilitarianism
Summary
Discounting is an economic subject serving many applications. The economic theory of cost–benefit analysis , for example, implies that decisions with delayed costs and benefits should be judged based on their net present value. Ethics and kinship appear to be the main motives that determine whether someone has a high or low discount factor Before discussing these motives, this section will first reflect on the literature about time discounting life saving , which until now has most closely approached empirical measurement of intergenerational discounting. Various publications on intergenerational discounting – of which Stern's (2006) is most well-known – present a normative discount factor that is based on welfare economics' ethical framework of total utilitarianism. This sort of utilitarianism implies zero pure discounting, since equal weight should be given to the welfare of current and future people. People who might have known more members further up their family tree such as great-grandparents will feel a stronger connection to a (potential) descendant that is distant (one's great-grandchild in this case)
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