Individual Time Preferences for Well-Being Allocation between Present and Future Generations

Abstract

Despite the utopian nature of the socialist societies of the 20th century, the public legitimacy of temporarily sacrificing current prosperity for the sake of a better future remains a notable characteristic of a society’s potential for modernization. This study focuses on measuring individual discount rates for the reallocation of two experimental types of non-market merit goods in favor of future generations—“saved lives” and “healthy and prosperous life-years”. In the case of “saved lives”, the experimental situation inherits the logic of similar foreign research, while in the case of “healthy and prosperous life-years” the experimental situation departs from the theoretical foundations of similar foreign approaches, which use the category of “healthy and prosperous life-years” to solve problems in the field of healthcare economics. In our case, the experimental situation gives data about individual political and economic decisions of the price at which additional current well-being might be allocated for the sake of the future generations. In particular, it provides an analysis of intertemporal choice when respondents vote for one of two programs: the first, with a rentier effect, provides society with the above-mentioned goods immediately, but does not impact the well-being of future generations, while the second requires a rejection of additional prosperity in the present and postpones access to those goods for several decades, but eventually allows the society to receive the goods in larger amounts or for a longer period of time. It is shown that the discount rates for “saved lives” in Russia are higher than for Europe and the US in similar experiments and amount to 20.4% and 11.8% for time periods of 25 and 50 years, respectively. Discount rates were calculated for “healthy and prosperous life-years” (6.1% and 3.9% for the same time periods). It is also shown that the share of respondents who prefer present-oriented programs (the distribution of benefits in favor of those living today) for Russia exceeds 75%. The main motives of this orientation towards the redistribution of benefits in favor of the present, rather than future generations, are identified, among which the main ones are the current standard of living, the limited forecast horizon, the principle of generational self-responsibility, the scientific and technological revolution factor, and the “time loop” factor.